Markets climb as inflation data continues mild and early bank earnings

Dow gained 342, advancers over decliners better than 3-1 & NAZ edged up 27.  The MLP index added 1 to 290 & the REIT index went up 2+ to the 424s.  Junk bond funds were slightly higher & Treasuries were little changed.  Oil was even in the high 78s following yesterday's rise & gold soared 33 to 2672.

Dow Jones Industrials

A measure of wholesale prices showed no change in Sep, pointing to a continued easing in inflation, the Labor Dept reported.  The producer price index (PPI), which measures what producers get for their goods & services, was flat for the month & up 1.8% from a year ago.  The forecast called for a monthly gain of 0.1% after Aug's increase of 0.2%.  Excluding food & energy, the PPI rose 0.2%, meeting expectations, & was up 2.8% from a year ago.  The report comes a day after the Labor Dept reported that the consumer price index, a more widely followed inflation measure that shows what consumers actually pay for goods & services, had an increase of 0.2% for the month & 2.4% from a year ago.  Together, the releases indicate that inflation is off its blistering pace that peaked more than 2 years ago but still mostly holds above the Federal Reserve's 2% target.  While neither is the Fed's primary inflation gauge, they both feed into the personal consumption expenditures price index that policymakers prefer.  Following the releases, multiple economists said they expect the PCE deflator to show an increase of about 0.2% or slightly more for the month when it is released near the end of Oct.  Fed officials in recent days have expressed confidence that inflation is heading back to target even though some aspects, such as shelter, food & vehicle costs, have held stubbornly higher.  Minutes from the Sep central bank meeting indicated policymakers were divided over the decision to slash the Fed's benchmark interest rate by ½ a percentage point.  Most officials say they expect to continue to cut as long as the data indicates.  Markets anticipate the Fed to lower by a qtr percentage point at each of its 2 remaining meetings this year.

Wholesale prices were flat in September, below expectations

JPMorgan (JPM), a Dow stock, posted 3rd-qtr results that topped estimates for profit & revenue as the company generated more interest income than expected.  EPS was $4.37 vs a $4.01 estimate & revenue was 43.3B vs a $41.63B estimate.  Profit fell 2% from a year earlier to $12.9B, while revenue climbed 6% to $43.3B.  Net interest income rose 3% to $23.5B, exceeding the $22.7B estimate, on gains from investments in securities & loan growth in its credit card business.  CEO Jamie Dimon touted the firm's quarterly results in a statement, while also addressing regulators' sweeping efforts to force banks to hold more capital & expressing concern about rising geopolitical risks, saying that conditions are “treacherous and getting worse.”   “We believe rules can be written that promote a strong financial system without causing undue consequences for the economy,” Dimon said, addressing the pending regulatory changes.  “Now is an excellent time to step back and review the extensive set of existing rules – which were put in place for a good reason – to understand their impact on economic growth” & the health of markets, he added.  The company also raised its full-year 2024 guidance for net interest income (NII) from the previous qtr, saying that NII would hit roughly $92.5B this year, up from the previous $91B guidance.  Annual expenses are projected at about $91.5B, down from the earlier $92B guidance.  Its provision for credit losses in the qtr was $3.1B, worse than the $2.9B estimate, as the company had $2.1B in charge-offs & built reserves for future losses by $1B.  The stock jumped 10.73 (5%).

JPMorgan Chase tops estimates for profit and revenue on better-than-expected interest income

Wells Fargo (WFC) reported 3rd-qtr earnings that exceeded expectations.  Adjusted EPS was $1.52 vs $1.28 expected & revenue was $20.37B versus $20.42B expected.  WFC posted $11.7B in net interest income, marking an 11% decrease from the same qtr last year & less than the estimate of $11.9B.  The decline was due to higher funding costs amid customer migration to higher-yielding deposit products.  “Our earnings profile is very different than it was five years ago as we have been making strategic investments in many of our businesses and de-emphasizing or selling others,” CEO Charles Scharf said.  “Our revenue sources are more diverse and fee-based revenue grew 16% during the first nine months of the year, largely offsetting net interest income headwinds.”  Net income fell to $1.42 per share, in the 3rd qtr, from $1.48 per share, during the same qtr a year ago.  The net income includes 10¢ a share, in losses on debt securities said.  Revenue dipped to $20.4B from $20.9B a year ago.  The bank set aside $1.07B as a provision for credit losses compared with $1.2B last year.  The stock went up 3.26 (6%).

Wells Fargo shares jump after earnings top Wall Street expectations

Stocks gained as big US banks got earnings season underway & investors weighed the likely impact of a hot inflation data & unchanged wholesale inflation on Federal Reserve policy.   Mean nervous ones are keeping gold in record territory.