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A new Inflation Rate hits the tape this morning, coming in flat month over month to +2.7% — still -30 basis points (bps) from the recent high +3.0% back in September. It continues an abrupt turnaround in Consumer Price Index (CPI) year over year, which had risen +70 bps from April to September of last year. And, of course, we’re thankfully miles away from multi-decade highs in the CPI Inflation Rate: back in June 2022, we hit +9.1%.
Oil and gasoline prices helped moderate prices last month: gasoline prices dropped -3.4% from +0.9% the prior month, while oil inflation slowed to +7.4% from +11.3%, respectively. Meanwhile, food prices increased by half a percentage point to +3.1%, and shelter reached +3.2%, up 20 bps month over month. Subtracting volatile food and energy prices, the core CPI print month over month reached +2.6% — in-line month over month and cooler than the +2.8% analysts had been expecting.
Month over month came in as expected at +0.3%, in-line with the previous month, and core CPI month over month cooled a tick to +0.2% from expectations. The non-seasonally adjusted index reached an all-time high +324, +331 on core. In short, while inflation is still present in the U.S. market, we’ve moderated notably from where it looked like we were headed just a couple months ago.
Q4 Earnings Season Kicks Off: JPMorgan & Delta
The biggest of the big Wall Street banks, JPMorgan Chase JPM, outperformed expectations on both top and bottom lines this morning. Earnings of $5.23 per share outpaced the $4.87 in the Zacks consensus for a +7.3% earnings surprise (JPM has not missed on earnings in nearly four years). Revenues of $45.8 billion improved over the $45.69 billion analysts were looking for.
Banking activity and a strong stock market through 2025 assisted JPMorgan’s fine quarter. Average loans gained +3% quarter over quarter. The company now has Assets Under Management (AUM) of $4.8 trillion, +18% year over year. Pre-market trading is up slightly, still looking to reach +1% year to date.
Delta Air LinesDAL also beat expectations in its Q4 report this morning, with earnings of $1.55 per share surpassing the Zacks consensus by 2 cents, while $16 billion in quarterly revenues easily bettered the $15.63 billion anticipated. Revenue guidance was ratcheted up, but signs of slowing demand are helping move pre-market trading down -4.5% at this hour.
What to Expect from Today’s Stock Market
After the opening bell, we’ll take a look at (government shutdown-delayed) New Home Sales results for October. Estimates are for the headline to have come down month over month to 710K seasonally adjusted, annualized units. An hour ahead of the closing bell today, we’ll see a new Budget Deficit for December. This is expected to drop to -$150 billion from -$87 billion reported a month ago.
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Ross Stores benefits from strong customer response across both banners, aiding sales. ROST posted 10% year-over-year sales growth, driven by 7% comps increase in Q3.
Casey’s fuel business once again outperformed broader industry trends, strengthening the company’s competitive positioning and reinforcing its traffic-driving advantage.
Dover is poised to gain from solid order booking, cost-reduction initiatives and execution of margin targets. Further, product digitization, e-commerce, new product development will boost growth.
The lack of other marketed drugs creates heavy dependence on its approved MASH therapy, Rezdiffra, for revenue generation. Any setback for the drug will weigh heavily on the stock.
Novo Nordisk is facing slower GLP-1 drugs growth due to the presence of compounded alternatives and rising competition. Patent expiry and pricing pressure across the diabetes market also remain a worry.
Olin's Epoxy segment is exposed to headwinds from weak economic conditions in Europe & China. It also faces headwinds from higher costs, pressured margins and penalties.
Intense competition in the wholesale power market, foreign currency fluctuation, retention of customers and disruptions in the fuel delivery system might impede the company’s growth.
Persistently mounting expenses due to higher commission fees are likely to limit KKR & Co.’s bottom-line growth. Its unfavorable ROE compared with the industry’s average is a concern.
American Eagle remains well placed on the back of cost-reduction efforts and brand progress. In addition, its Powering Profitable Growth plan bodes well.
Netflix’s accelerating ad business, AI-driven innovation, record engagement on content strength, focus on originals across various genres and languages are key positives.
