US equities rose Wednesday morning as investors watched a series of closely monitored earnings reports and digested another hot print on US inflation
The S&P 500, Dow and Nasdaq sought direction after a three-day losing streak.
Investors on Wednesday received a series of quarterly reports from some major U.S. companies and stock index components. These included JPMorgan Chase (JPM) – the largest US bank by assets – along with Delta Air Lines (DAL) and Bed, Bath & Beyond (BBBY).
JPMorgan Chase CEO Jamie Dimon gave a cautiously optimistic view of the US economy in the bank’s earnings announcement on Wednesday. Dimon noted that he remained “optimistic about the economy, at least in the short term,” but still sees “significant geopolitical and economic challenges ahead due to high inflation, supply chain problems and the war in Ukraine.” And the bank also built up its credit reserves with a net $ 902 million, “mainly due to higher probabilities of downward risk,” Dimon said.
Meanwhile, Delta Air Lines, one of the major airlines at the center of the reopening trade, suggested that business would grow further in the current quarter, although the first quarter results showed another loss as the airline struggled with the omicron variant earlier at this point. year. The airline returned to profitability in March, Delta noted, noting that revenue is expected to reach between 92% and 97% of pre-pandemic levels in the current quarter ending in June.
This early set of earnings reports helped set the tone for what is ultimately expected to be a much milder quarter for earnings growth than in recent periods. While companies are struggling with rising labor, raw materials and transportation costs and last year’s initial reopening jumps in activity, many on Wall Street are looking for narrower margins than in recent quarters, although sales are holding up sharply due to rising consumer demand and rising prices. Across the S&P 500, companies as a whole are expected to report year-on-year earnings growth of just 4.5%, which, if realized, would mark the slowest pace since the fourth quarter of 2020, according to FactSet.
“This earnings season will be one of the most important earnings seasons because it will give you a lot of insight into which companies … have the lasting demand, which companies have that pricing power,” Kristen Bitterly, Citi Head of Global Wealth Investment , Yahoo Finance Live reported on Tuesday.
“Even in decades like the 1970s, when we had extreme inflation, high-quality U.S. equities were able to double their stock price during that period,” she added. “So it’s the pocket in the market where we are confidently either staying invested or being invested.”
And in fact, inflation remains a primary concern for investors, and it threatens to weigh further on both consumers’ wallets and corporate profits. The Bureau of Labor Statistics’ March Consumer Price Index (CPI) showed that inflation rose at the fastest rate since the end of 1981 last month, rising slightly faster than expected 8.5% compared to last year.
However, some economists suggested that the report was not just bad news, but showed some preliminary signs of a peak in the rate of price increase.
“I think the KPI report actually has a little more good news in it than it looks right on the surface … there are a number of things in here that suggest that we are starting to see inflation peaks and it will roll over in the next few months, “Tom Simmons, Jefferies’ fixed income economist, told Yahoo Finance Live on Tuesday. “[It’s] important to keep in mind that the CPI, for March, the reference period here was just after the Russian invasion of Ukraine. So in reality, it captures the most acute period of gasoline price increases. And we’ve seen that they’re already starting to soften in the market over the last few weeks. “
“The other thing is that services from previous energy – and if you remove the airline component – it was actually also a little bit softer than the last few months,” he added. “Housing has actually come in a bit softer in the last few months, and goods from previous energy are also coming in a bit softer. So you know, the consumer has been pretty well able to cope with the storm here with inflation.”
9:31 ET: Stocks looking for direction
Here were the main movements in the markets from kl. 9:31 ET:
S&P 500 (^ GSPC): -4.23 (-0.10%) to 4,393.22
Dow (^ DJI): -32.30 (-0.09%) to 34.188.06
Nasdaq (^ IXIC): -9.23 (-0.07%) to 13,362.34
raw (CL = F): + $ 1.44 (+ 1.43%) to $ 102.04 per barrel
gold (GC = F): + $ 5.20 (+ 0.26%) to $ 1,981.30 pr. ounce
10-year Treasury (^ TNX): -2.6 bps to give 2.6990%
8:50 ET: Producer prices hit new high
U.S. producer prices for final demand rose 1.4% in March after rising 0.9% in February, the Department of Labor said Wednesday. For the full year, the PPI jumped 11.2% – the biggest gain since 12-month data was calculated in November 2010. The results replaced estimates of 10.6% according to the Bloomberg consensus.
Recent pressure suggests that inflation will remain high as Russia’s war on Ukraine rages on, pushing up oil and other commodity prices.
7:20 ET: Stock futures rise in the middle of earnings
Here is where the shares were traded on Wednesday morning:
S&P 500 futures (ES = F): + 26.5 points (+ 0.6%) to 4,419.50
Dow futures (ÅM = F): +172 points (+ 0.5%) to 34,311.00
Nasdaq futures (NQ = F): +110.75 points (+ 0.79%) to 14,055.75
raw (CL = F): + $ 1.45 (+ 1.44%) to $ 102.05 per barrel
gold (GC = F): + $ 4.20 (+ 0.21%) to $ 1,980.30 pr. ounce
10-year Treasury (^ TNX): +0.6 bps to give 2.733%
7:03 ET: JPMorgan announces mixed results for Q1 as investment banking revenue declines from last year
JPMorgan Chase released a mixed result for the first quarter, with total adjusted revenue topping Wall Street’s estimates, while some larger companies in the bank showed some softening.
Adjusted revenue of $ 31.6 billion decreased 4.6% compared to last year, but exceeded the consensus estimates of $ 31.4 billion according to Bloomberg data. Both interest rate and share sales and trading income topped expectations, while falling compared to last year, when they amounted to around $ 5.7 billion and $ 3.1 billion, respectively. However, investment bank income fell by a more marked 28% and missed estimates, totaling $ 2.06 billion, as equity and debt insurance activity declined earlier this year compared to last year.
CEO Jamie Dimon also noted that the banks’ core lending business remained solid during the quarter.
“The lending strength continued with average fixed loans up 5%, while credit losses are still at historically low levels,” Dimon said in the earnings announcement.
6:50 am ET: Delta shares rise after the airline’s smaller loss than expected in the first quarter, returning to profitability in March
Delta Air Lines shares rose higher in the pre-market session after the airline issued estimates that topped first-quarter results, which included a smaller-than-expected loss.
Adjusted losses came out to $ 1.23 per share. per share for the March quarter, or less than the consensus analysts who expected a loss of $ 1.26 per share. share, according to Bloomberg data. Adjusted revenue was $ 8.2 billion and was 79% recovered compared to levels from the comparable quarter of 2019 before the pandemic. Capacity was 83% restored compared to the pre-pandemic period, Delta added.
For the current quarter, which ends in June, Delta said it expects capacity to increase further to 84% of the level in the June quarter of 2019, with total revenue between 93% and 97% of the levels from that period in 2019 .
“With a strong upturn in demand as omicron faded, we returned to profitability in March, producing a solid adjusted operating margin of almost 10%,” Delta CEO Ed Bastian said in the company’s earnings announcement Wednesday morning. “As our brand preference and demand momentum grows, we are successfully recovering higher fuel prices, driving our outlook for an adjusted operating margin of 12 to 14% and a strong free cash flow in the June quarter.”
18:10 ET Tuesday: Stock futures are heading towards a lower opening
Here’s where the markets shopped Tuesday night before opening time:
S&P 500 futures (ES = F): + 4.25 points (+ 0.1%) to 4,397.25
Dow futures (ÅM = F): +33 points (+ 0.1%) to 34,172.00
Nasdaq futures (NQ = F): +17.75 points (+ 0.13%) to 13,962.75
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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