Dow sank & then jumped to a 253 gain, decliners ahead of advancers 3-2 & NAZ went up 38. The MLP index rose 2+ to the 209s & the REIT index slid back to the 341s. Junk bond funds were little changed & Treasuries saw selling, taking the yield on the 10 year Treasury up to 4%. Oil recovered 1 to the 88s & gold dropped 10 to 1659.
AMJ (Alerian MLP index tracking fund)
Prices consumers pay for a wide variety of goods & services rose more than expected in Sep as inflation pressures continued to weigh on the economy. The consumer price index increased 0.4% for the month, more than the 0.3% estimate, according to the Bureau of Labor Statistics (BLS). On a 12-month basis, so-called headline inflation was up 8.2%, off its peak around 9% in Jun but still hovering near the highest levels since the early 1980s. Excluding volatile food & energy prices, core CPI accelerated 0.6% against the estimate for a 0.4% increase. Core inflation was up 6.6% from a year ago, the biggest 12-month gain since 1982. The report rattled financial markets, with stock market futures plunging & Treasury yields moving up as traders priced in likely more aggressive interest rate hikes ahead from the Federal Reserve. Another large jump in food prices boosted the headline number. The food index rose 0.8% for the month, the same as Aug & was up 11.2% from a year ago. That increase helped offset a 2.1% decline in energy prices that included a 4.9% drop in gasoline. Energy prices have moved higher in Oct, with the price of regular gasoline at the pump nearly 20¢ higher than a month ago. Closely watched shelter costs, which make up about 1/3 of CPI, rose 0.7% % are up 6.6% from a year ago. Transportation services also showed a big bump, increasing 1.9% on the month & 14.6% on an annual basis. Medical care costs rose 1% in Sep. The rising costs meant more bad news for workers, whose average hourly earnings declined 0.1% for the month on an inflation-adjusted basis & are off 3% from a year ago, according to BLS. Inflation is rising despite aggressive Federal Reserve efforts to get price increases under control.
Inflation increased 0.4% in September, more than expected despite rate hikes
Treasury yields rose as investors reacted to a hotter than expected rise in consumer prices. The yield on the 2-year Treasury note jumped 19 basis points to 4.48%. The 10-year Treasury yield rose 12 basis points to crack the 4% level again, climbing to 4.022%. Yields & prices move in opposite directions & one basis point equals 0.01%. Markets are looking at the data for hints about future Federal Reserve policy, as some investors fear rates are being hiked too quickly & the central bank is dragging the US economy into a recession. Fed speakers have struck a hawkish tone ahead of their next meeting on Nov 1-2 & have said they are not satisfied with recent inflation figures. Analysts are therefore broadly expecting another 75 basis point hike to be implemented next month, a view likely reinforced by the CPI report. The consumer prices report follows yesterday's stronger-than-expected producer price index inflation reading. Headline PPI, which reflects the wholesale price of goods, increased by 0.4%, rather than the 0.2% predicted.
Inflation Stays Higher Than Predicted
Delta (DAL expects to post another profit in the last qrr of the year & said both leisure & business travel continue to recover. The
carrier expects EPS of $1-1.25
in Q4, with revenue topping the same period of 2019 by
5=9%, a sign higher airfares will stay firm. For Q3, net income was $695M ($1.08
per share) down from a $1.5B profit 3 years earlier, on
record revenue of close to $14B, the results of a surge in summer
travel with high fares to match. Adjusting for one-time items, EPS was $1.51, while adjusted revenue came in at
$12.8B, 3% above 2019 levels, despite a smaller schedule. "The
travel recovery continues as consumer spend shifts to experiences and
demand improves in corporate and international," CEO Ed Bastian said. The stock was up 1.28.
If you would like to learn more about DAL, click on this link:
club.ino.com/trend/analysis/stock/DAL?a_aid=CD3289&a_bid=6ae5b6f7
Delta forecasts another profit after summer boom drives record revenue
Dow Jones Industrials
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