On the evening of the 11th Beijing time, U.S. stocks opened with mixed ups and downs on Friday, and the September PPI index remained flat, indicating mild inflation pressure, boosting market expectations for another rate cut by the Fed in November. JPMorgan and Wells Fargo & Co. and other large banks released their financial reports, marking the beginning of the U.S. stock earnings season.
As of the time of publication, the three major indexes showed divergent trends, with the Dow up 0.36%, the S&P 500 up 0.21%, and the Nasdaq down 0.09%.
US stocks closed slightly lower on Thursday,$S&P 500 Index (.SPX.US)$with a decline of about 0.2%, the Dow fell 0.14%, both dropping from Wednesday's record levels.
Data released on Thursday showed that the U.S. CPI rose 0.2% month-on-month in September and 2.4% year-on-year, both higher than market expectations. In addition, the U.S. Department of Labor reported that initial jobless claims hit a one-year high last week. These data have made investors worried that U.S. inflation is not cooling off rapidly, with inflation remaining sticky and a soft labor market.
After the data release, according to the CME FedWatch Tool, federal fundsFutures Trading Commission (CFTC)'s latest data shows that investors are significantly reducing their net short positions in US soybean, corn, and wheat contracts, easing bearish sentiment in the market.traders predicted an 87% likelihood of a 25 basis-point rate cut by the Fed in November. However, Fed policymakers have stated that they will closely monitor more data, emphasizing that the future interest rate path is not predetermined, and these data will impact policy decisions.
A week ago, the tool predicted a 32.1% chance of a 50 basis-point rate cut by the Fed in November, with a 67.9% chance of a 25 basis-point cut.
Morningstar's senior American economist Preston Caldwell said: "Thursday's CPI data is not enough to completely stop the Federal Reserve from cutting interest rates in November. But if future economic data continues to be similar to Thursday's data, and economic activity data is strong, it could lead to the Federal Reserve staying put at the December 2024 or January 2025 meeting."
On Friday's economic data front, the September Producer Price Index (PPI), which measures wholesale prices, remained flat, indicating that the inflation outlook remains favorable, supporting the view that the Federal Reserve will cut interest rates again next month.
The U.S. Department of Labor reported that the September PPI in the U.S. was 0% on a month-over-month basis, expected 0.1%, with a previous value of 0.2%. The September PPI in the U.S. rose by 1.8% year-on-year, expected 1.6%, with the previous value revised from 1.70% to 1.9%.
The decline in gasoline prices restrained the September PPI, indicating that inflation is further stabilizing.
The PPI report pointed out that medical care and hospital outpatient costs remained almost unchanged, while airfare prices saw a significant rebound. Portfolio management fees saw a slight increase. Service costs rose by 0.2%, slowing down from the 0.4% increase the previous month. Wholesale food prices increased by 1%, the largest increase since February, while energy prices fell by 2.7%.
The CPI data released by the U.S. Department of Labor on Thursday showed that inflation in September was slightly higher than expected, mainly due to the rise in housing, food, and clothing costs.
Federal Reserve officials will consider these two reports, as well as the latest data being released, to formulate the interest rate cut path.
Recent statements from Federal Reserve officials show differences in viewpoints. Chicago Fed President Charles Evans said on Thursday that "an overwhelming majority" of Fed policymakers expect rates to "gradually decline to levels far below current levels," while Atlanta Fed President Raphael Bostic stated that he is "absolutely willing" to stay put in November.
Recent devastating hurricanes hitting the southeastern United States in the past few weeks will make it more difficult for the Federal Reserve to assess the economic situation. Previously, the Federal Reserve often ignored the temporary supply shocks caused by natural disasters. However, Diane Swonk, the chief economist for KPMG USA, pointed out that the frequency and severity of recent natural disasters mean that the Federal Reserve is increasingly finding it hard to ignore them.
Nancy Vanden Houten, the chief U.S. economist at Oxford Economics, said that the impact of the hurricanes "may last for weeks", and the October non-farm payroll report may be "significantly affected".
However, analysts still expect the Federal Reserve to continue cutting interest rates by 25 basis points at the meeting early next month. Some economists base their views on the recent speech by Federal Reserve Chairman Powell, where he hinted that the baseline expectation is for further rate cuts of 25 basis points.
JPMorgan and Wells Fargo & Co, along with other large banks, announced their third-quarter financial reports on Friday, marking the start of the U.S. stock earnings season.
Focus stocks
Growth tech stocks fluctuate. $Tesla (TSLA.US)$ Plunged more than 8%,$Broadcom (AVGO.US)$fell by nearly 4%.
China concept stocks saw mixed movements in rise and fall,$KE Holdings (BEKE.US)$Up nearly 2%,$PDD Holdings (PDD.US)$Rising by nearly 1%, $Alibaba (BABA.US)$ Slightly down.
Large bank stocks are rising together, $Wells Fargo & Co (WFC.US)$ Increasing by over 5%, $Bank of America (BAC.US)$ Up more than 4%. $JPMorgan (JPM.US)$ Rises nearly 4%.
$Tesla (TSLA.US)$Plunged over 8%, CEO Musk announced the launch of a self-driving rental car named CyberCab and a self-driving Model Y in a press conference on Friday.
$NVIDIA (NVDA.US)$ Slightly down, Goldman Sachs raised Nvidia's stock price to $150 and maintained a buy rating.
$Advanced Micro Devices (AMD.US)$A slight increase of 0.41%, at the Advancing AI 2024 event held in San Francisco on Thursday, a new generation of Ryzen CPU, Instinct AI computing card, EPYC AI chip, and other products were released.
$Uber Technologies (UBER.US)$Soared nearly 7%, Bank of America Securities believes Uber is expected to benefit from the competition in the self-driving car market.
$Lyft Inc (LYFT.US)$ Up nearly 8%, Tesla released a Robotaxi plan that disappointed some investors.
$Wells Fargo & Co (WFC.US)$Up more than 5%, investment banking business "rescues", Wells Fargo & Co Q3 earnings exceed expectations, Stifel analyst maintains a 'buy' rating on the stock with a target price of $51.
$JPMorgan (JPM.US)$Up more than 3%, third-quarter managed net interest income exceeds expectations.
$Taiwan Semiconductor (TSM.US)$Up nearly 2%, Morgan Stanley says Taiwan Semiconductor is expected to maintain revenue growth momentum over the next five years.
Editor/Emily
