S&P 500 Hits Fresh Record as JPMorgan Rallies 4%: Markets Wrap

“We expect earnings season to be solid, including the big banks,” said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management. “Credit card delinquencies are still very low and increased economic activity should drive bank revenues.”

Traders also waded through economic readings. A measure of prices paid to US producers was unchanged in September, suggesting further progress toward tamer inflation. Consumer sentiment unexpectedly fell for the first time in three months as lingering frustration with a high cost of living offset more sanguine views of the job market.

The S&P 500 rose 0.5%. The Nasdaq 100 was little changed. The Dow Jones Industrial Average rose 0.7%. Tesla Inc. dropped 7.7% after the unveiling of its highly anticipated self-driving taxi was light on specifics. Uber Technologies Inc. and Lyft Inc. climbed at least 8%.

The yield on 10-year Treasuries advanced three basis points to 4.09%. The Bloomberg Dollar Spot Index was little changed. West Texas Intermediate crude rose 0.2% to $76.01 a barrel

Apollo’s Torsten Slok noted that financials have been among top outperformers during Federal Reserve’s rate cutting cycles that end with a “soft landing.”

He looked at total returns of each sector during the two rate cut cycles that didn’t overlap with a recession, from July 1995 to January 1996 and from September 1998 to November 1998.

In the run-up to the third-quarter earnings season, an unusually large dichotomy took shape, according to Gina Martin Adams, Michael Casper and Wendy Soong at Bloomberg Intelligence. Analysts kept lowering the bar for S&P 500 companies while management guidance implies a significantly stronger outlook — suggesting that companies should easily beat expectations, they noted.

S&P 500 net income growth is now forecast to rise a mere 4.2% in the third quarter, down from more than 7% growth expected in mid-July, thanks mostly to the energy sector. Analysts’ souring outlook is not exclusive to energy, however, as estimates for all sectors except for communication services fell, they noted.

Currently, 37% of S&P 500 companies are expected to report lower earnings per share than the previous year this quarter, compared to 26.6% last quarter, BI said.

Corporate Highlights:

• BlackRock Inc. pulled in a record $221 billion of total client cash last quarter, pushing the world’s largest money manager to an all-time high of $11.5 trillion of assets as it seeks to become a one-stop shop for stocks, bonds and, increasingly, private assets.
• Bank of New York Mellon Corp.’s third-quarter profit topped expectations after a jump in asset values fueled a 5% increase in fee revenue.
• With the paralyzing labor strike now running for a full four weeks, Boeing Co. is taking a harder line with union representatives by filing unfair labor practice charges, saying the other side has bargained in bad faith and undermined its own deal.
• Humana Inc. released final quality ratings for private Medicare Advantage health plans.
• BP Plc expects its net debt to have risen in the third quarter due to lower refining margins and changes to the timing of asset sales.

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.5% as of 10:59 a.m. New York time
• The Nasdaq 100 was little changed
• The Dow Jones Industrial Average rose 0.7%
• The Stoxx Europe 600 rose 0.5%
• The MSCI World Index rose 0.5%

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0944
• The British pound rose 0.1% to $1.3074
• The Japanese yen fell 0.5% to 149.26 per dollar

Cryptocurrencies

• Bitcoin rose 3.4% to $61,746.49
• Ether rose 2.8% to $2,432.33

Bonds

• The yield on 10-year Treasuries advanced three basis points to 4.09%
• Germany’s 10-year yield advanced three basis points to 2.29%
• Britain’s 10-year yield advanced one basis point to 4.22%

Commodities

• West Texas Intermediate crude rose 0.2% to $76.01 a barrel
• Spot gold rose 0.9% to $2,653.08 an ounce