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Pre-market futures have sunk into the red this morning, immediately following the September print on the Consumer Price Index (CPI), which is showing a re-acceleration of inflation after a summer of agreeably dormant, flat levels. Bond yields are also notably higher on the news.
Ahead of the CPI report, the Dow was +227 points, the Nasdaq was +12 and the S&P 500 +25 points. Currently, the Dow is -76, the Nasdaq -217 and the S&P 500 -17 points. The 10-year yield moved from +5.187% ahead of the print to +5.304% now, the 2-year went from +4.774% to +4.924% and the 30-year from +5.540% to +5.609%.
CPI Inflation at Highest Rates Since Last Spring
Why the hubbub? We’d just seen the consensus estimate on year-over-year CPI headline (aka “the Inflation Rate”) tick down 10 basis points (bps) from the start of the week, but it came in as earlier expected: +3.7%. The month-over-month tally was in-line with expectations at +0.6%, but this is up notably for the past three months and now stands at the highest level since April of this year. The +3.7% Inflation Rate is highest since May.
We had seen a real flattening on the Inflation Rate over the previous three months, but now we’ve back up in the 2022 range, when inflation had spun out of control based on post-Covid supply chain issues and a slow-moving Fed to raise interest rates.
Stripping out volatile food and energy costs bring us the core CPI numbers, and here we’re a little warmer than expected: +0.3% on core month over month and +2.6% year over year, both 10 bps higher than analysts were looking for. These numbers may look pretty benign as a static image, but they are going higher; back in June, we were at 0.0% core CPI month over month.
Tomorrow we’ll hear the other shoe drop when the Producer Price Index (PPI) — the wholesale inflation print relative to CPI’s retail inflation — for September hits the tape. Last month, this came in 200 bps hotter on year-over-year headline than CPI did: +5.4% versus +3.4%. This figure is estimated to tick up to +5.5% in tomorrow’s report, which is clearly well above the Fed’s preferred inflation rate of +2.0%.
Q3 Earnings at a Glance: MS, BAC, PGR & More
Investment bank giant Morgan Stanley (MS - Free Report) outperformed expectations in its Q3 report this morning, with earnings of $3.03 per share surpassing the $2.83 Zacks consensus. Revenues of $20.34 billion beat the $19.74 billion estimate. This continues Morgan Stanley’s strong earnings performance, which has only posted one miss in the past five years.
Bank of America (BAC - Free Report) , hit by a $1.2 billion regulatory fine in its Q3, came up short of estimates this morning: earnings of $0.91 per share on revenues of $30.0 billion versus projections for $1.11 per share and $30.62 billion, respectively. This is only the second miss in the past five years for the big bank. Shares are down -7% in early trading, deepening from the stock’s -1.9% year to date.
Keeping with the finance companies another moment, BlackRock (BLK - Free Report) posted strong numbers in its Q3 report ahead of today’s open. Earnings of $15.93 per share amounted to a +14% positive surprise, while revenues of $7.75 billion was up +3.96% from the Zacks consensus. Shares are up +2% in this tough trading environment.
Auto insurance major The Progressive (PGR - Free Report) posted a mixed Q3 this morning: earnings of $4.60 per share beat the $4.46 estimate on adjusted revenues of $23.36 billion, which narrowly missed the Zacks consensus. This does mark Progressive’s fourth-straight earnings beat, but shares are down -6% in pre-market trading.
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Image: Bigstock
Hotter CPI Sends Futures Lower as Yields Jump
Pre-market futures have sunk into the red this morning, immediately following the September print on the Consumer Price Index (CPI), which is showing a re-acceleration of inflation after a summer of agreeably dormant, flat levels. Bond yields are also notably higher on the news.
Ahead of the CPI report, the Dow was +227 points, the Nasdaq was +12 and the S&P 500 +25 points. Currently, the Dow is -76, the Nasdaq -217 and the S&P 500 -17 points. The 10-year yield moved from +5.187% ahead of the print to +5.304% now, the 2-year went from +4.774% to +4.924% and the 30-year from +5.540% to +5.609%.
CPI Inflation at Highest Rates Since Last Spring
Why the hubbub? We’d just seen the consensus estimate on year-over-year CPI headline (aka “the Inflation Rate”) tick down 10 basis points (bps) from the start of the week, but it came in as earlier expected: +3.7%. The month-over-month tally was in-line with expectations at +0.6%, but this is up notably for the past three months and now stands at the highest level since April of this year. The +3.7% Inflation Rate is highest since May.
We had seen a real flattening on the Inflation Rate over the previous three months, but now we’ve back up in the 2022 range, when inflation had spun out of control based on post-Covid supply chain issues and a slow-moving Fed to raise interest rates.
Stripping out volatile food and energy costs bring us the core CPI numbers, and here we’re a little warmer than expected: +0.3% on core month over month and +2.6% year over year, both 10 bps higher than analysts were looking for. These numbers may look pretty benign as a static image, but they are going higher; back in June, we were at 0.0% core CPI month over month.
Tomorrow we’ll hear the other shoe drop when the Producer Price Index (PPI) — the wholesale inflation print relative to CPI’s retail inflation — for September hits the tape. Last month, this came in 200 bps hotter on year-over-year headline than CPI did: +5.4% versus +3.4%. This figure is estimated to tick up to +5.5% in tomorrow’s report, which is clearly well above the Fed’s preferred inflation rate of +2.0%.
Q3 Earnings at a Glance: MS, BAC, PGR & More
Investment bank giant Morgan Stanley (MS - Free Report) outperformed expectations in its Q3 report this morning, with earnings of $3.03 per share surpassing the $2.83 Zacks consensus. Revenues of $20.34 billion beat the $19.74 billion estimate. This continues Morgan Stanley’s strong earnings performance, which has only posted one miss in the past five years.
Bank of America (BAC - Free Report) , hit by a $1.2 billion regulatory fine in its Q3, came up short of estimates this morning: earnings of $0.91 per share on revenues of $30.0 billion versus projections for $1.11 per share and $30.62 billion, respectively. This is only the second miss in the past five years for the big bank. Shares are down -7% in early trading, deepening from the stock’s -1.9% year to date.
Keeping with the finance companies another moment, BlackRock (BLK - Free Report) posted strong numbers in its Q3 report ahead of today’s open. Earnings of $15.93 per share amounted to a +14% positive surprise, while revenues of $7.75 billion was up +3.96% from the Zacks consensus. Shares are up +2% in this tough trading environment.
Auto insurance major The Progressive (PGR - Free Report) posted a mixed Q3 this morning: earnings of $4.60 per share beat the $4.46 estimate on adjusted revenues of $23.36 billion, which narrowly missed the Zacks consensus. This does mark Progressive’s fourth-straight earnings beat, but shares are down -6% in pre-market trading.