We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Things just keep getting interestinger and interestinger in today’s stock market. In what clearly looked like rallying conditions earlier this morning — ahead of early Q3 earnings and inflation reports scheduled the next two days, which saw the Dow +400 points at its intraday peak — an afternoon statement by the Bank of England (BoE) brought fresh concerns to the U.K. bond market, and sent U.S. indices back into the red.
We wound up positive on the Dow, but just barely: +35 points, or +0.12%, which ended a four-day losing streak on the blue chip index. Both the S&P 500 and the Nasdaq did keep a five-day losing streak intact, -0.66% and -1.10%, respectively — both taking out fresh 52-week lows today. The small-cap Russell 2000 fell -0.22% on the day.
This afternoon, Governor of the Bank of England, Andrew Bailey, announced the end to its emergency intervention in the bond markets — Friday. “You’ve got three days. You’ve got to get this done,” he told pension fund controllers who are heavily invested in U.K. debt. Borrowing costs in the country spiked after the incoming Tory government promised huge tax cuts in an attempt to spur its lagging economy. Currently, the British pound to U.S. dollar ratio is 1.10, taking out the previous low 1.12 we saw back in February of 1985.
This stronger dollar, by the way, can be seen in today’s earnings report from Louis Vuitton Moet Hennessey, or LVMH (LVMUY - Free Report) , which showed sales growth of +19% year over year on +43% growth in Europe. This is a sign that wealthy Americans traveled to Europe this past summer and bought luxury handbags, champagne, etc. Its Fashion and Leather segment grew +50%, notably without China’s help, which remained sandbagged with zero-Covid policies from their central government. If there is fear of a global recession out there, clearly it’s not yet being felt by high-end consumers.
Further in this vein, also today the International Monetary Fund (IMF) cut its forecast for global economic growth next year by half a percentage point, from +3.2% to +2.7%. The IMF cited the ongoing war in Ukraine, its subsequent energy crisis, especially in Europe and overall inflationary pressures as the "stormy waters" it sees ahead. This statement carries tones we heard from JPMorgan (JPM - Free Report) Chair Jamie Dimon yesterday.
Here at home, Pepsico (PEP - Free Report) is scheduled to release Q3 earnings ahead of the opening bell. The Zacks Rank #3 (Hold)-rated snack and beverage giant expects +3.3% growth on both top and bottom lines over the past three months. Pepsi has not posted a quarterly earnings miss in more than a decade; to do so tomorrow morning might be setting a dire precedent for Q3 earnings season just getting started.
Finally, a final-demand report on Producer Price Index (PPI) for September is out tomorrow morning, as well. A month ago, this important measure of wholesale inflation remained elevated at +8.7% year over year; +5.6% when we strip out volatile food and energy costs (“core”). As PPI is often a forward indicator of future Consumer Price Index (CPI) data (due Thursday morning), a big drop in tomorrow’s PPI on both headline and core would be a good step in the right direction that the Fed’s initiatives on interest rates is having the desired effect.
Image: Bigstock
Markets Pull Back on BoE Move; PPI & Q3 Tomorrow
Things just keep getting interestinger and interestinger in today’s stock market. In what clearly looked like rallying conditions earlier this morning — ahead of early Q3 earnings and inflation reports scheduled the next two days, which saw the Dow +400 points at its intraday peak — an afternoon statement by the Bank of England (BoE) brought fresh concerns to the U.K. bond market, and sent U.S. indices back into the red.
We wound up positive on the Dow, but just barely: +35 points, or +0.12%, which ended a four-day losing streak on the blue chip index. Both the S&P 500 and the Nasdaq did keep a five-day losing streak intact, -0.66% and -1.10%, respectively — both taking out fresh 52-week lows today. The small-cap Russell 2000 fell -0.22% on the day.
This afternoon, Governor of the Bank of England, Andrew Bailey, announced the end to its emergency intervention in the bond markets — Friday. “You’ve got three days. You’ve got to get this done,” he told pension fund controllers who are heavily invested in U.K. debt. Borrowing costs in the country spiked after the incoming Tory government promised huge tax cuts in an attempt to spur its lagging economy. Currently, the British pound to U.S. dollar ratio is 1.10, taking out the previous low 1.12 we saw back in February of 1985.
This stronger dollar, by the way, can be seen in today’s earnings report from Louis Vuitton Moet Hennessey, or LVMH (LVMUY - Free Report) , which showed sales growth of +19% year over year on +43% growth in Europe. This is a sign that wealthy Americans traveled to Europe this past summer and bought luxury handbags, champagne, etc. Its Fashion and Leather segment grew +50%, notably without China’s help, which remained sandbagged with zero-Covid policies from their central government. If there is fear of a global recession out there, clearly it’s not yet being felt by high-end consumers.
Further in this vein, also today the International Monetary Fund (IMF) cut its forecast for global economic growth next year by half a percentage point, from +3.2% to +2.7%. The IMF cited the ongoing war in Ukraine, its subsequent energy crisis, especially in Europe and overall inflationary pressures as the "stormy waters" it sees ahead. This statement carries tones we heard from JPMorgan (JPM - Free Report) Chair Jamie Dimon yesterday.
Here at home, Pepsico (PEP - Free Report) is scheduled to release Q3 earnings ahead of the opening bell. The Zacks Rank #3 (Hold)-rated snack and beverage giant expects +3.3% growth on both top and bottom lines over the past three months. Pepsi has not posted a quarterly earnings miss in more than a decade; to do so tomorrow morning might be setting a dire precedent for Q3 earnings season just getting started.
Finally, a final-demand report on Producer Price Index (PPI) for September is out tomorrow morning, as well. A month ago, this important measure of wholesale inflation remained elevated at +8.7% year over year; +5.6% when we strip out volatile food and energy costs (“core”). As PPI is often a forward indicator of future Consumer Price Index (CPI) data (due Thursday morning), a big drop in tomorrow’s PPI on both headline and core would be a good step in the right direction that the Fed’s initiatives on interest rates is having the desired effect.
Questions or comments about this article and/or its author? Click here>>