U.S. stocks erased gains Friday in early-session trading amid more inflation views.
S&P 500 (^GSPC) up 0.6%, while the Dow Jones Industrial Average (^DJI) edged higher 0.6%. The technology-heavy Nasdaq Composite (^IXIC) ticked up 0.9%.
Stocks fell as a consumer survey from the University of Michigan showed that inflation expectations were increasing, another indicator closely watched by the Federal Reserve.
Wall Street was tuned in Friday to third-quarter earnings by financial heavyweights, such as JPMorgan Chase (JPM), Morgan Stanley (MS), and Citigroup (C).
JPMorgan Chase kicked off earnings before the opening bell Friday. JPMorgan stock rose 2% after the bank’s quarterly results topped Wall Street consensus for earnings and revenue.
Wells Fargo posted stronger-than-expected revenue for the third quarter, offsetting a profit miss. The stock is up 3%. Morgan Stanley reported a profit drop in the third quarter, prompting shares fell nearly 2% in premarket trading. Citigroup reported a 25% drop in third-quarter profit on Friday following weak investment banking activity.
Elsewhere on Friday morning: Kroger announced a $24.6 billion deal to buy rival Albertsons, and Beyond Meat announced a 19% reduction in the plant-based meat company’s global workforce after another brutal quarter.
On the retail front, shoppers’ retail spending was flat in September amid high inflation and climbing interest rates. Retail sales, excluding gasoline, were up 0.1%. The measure doesn’t adjust for inflation. Economists surveyed by Bloomberg called for a 0.2% gain in retail sales.
“The high inflation environment is weighing on consumer morale and purchasing power, and it is forcing many households to dip into savings and use credit to finance outlays,” EY Parthenon Chief Economist Gregory Daco, said in statement.
“While consumers remain willing to spend, many families, especially those at the lower-to-median end of the income spectrum, are feeling increasingly constrained by elevated prices and rising interest rates,” Daco added.
Stocks could try for another rally while on Thursday, stocks started the day sharply lower after a hotter-than-expected inflation report. But that didn’t last long, as stocks trimmed their losses and turned green before midday trading, ending a six-day losing streak with a big rebound rally.
“We got a “bear hug”… S&P 500 5% in 5 hours after hot CPI because it was simply so oversold,” Michael Harnett, investment strategist at Bank of America, wrote in a note on Friday.
Thursday’s stock market gains followed the main event of the week on Wall Street — consumer price data, which came in hotter than expected. The Consumer Price Index (CPI) for September showed prices rose 8.2% over the prior year and 0.4% over the prior month. The core consumer price index, which excludes food and energy, rose 6.6% from a year ago, marking the highest level since 1982. Core CPI rose by 0.6% month over month.
To other investors, the sharp moves were excessive short market positioning, during which traders rushed to cover following the hot inflation data.
“What followed was extraordinary and may have been exacerbated by short-covering, perhaps even some panic,” Oanda Senior Market Analyst Craig Erlam wrote in a note. “While it may indicate the market has established a bottom for now, given the scale of the declines since the August peak, that doesn’t necessarily mean the worst is suddenly behind us. Not when inflation is so stubborn, the labor market so tight and the Fed so intent on more aggressive hikes.”
In the currency market, the dollar extended gains compared to the yen, climbing to the highest level since 1990. Still the dollar is up 15% for the year against other currencies while the 10-year Treasury yield wavered close to 4%. Elsewhere, Bitcoin also rebounded, rallying back toward $20,000. However, the digital asset is down 58.6% this year.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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Source: https://finance.yahoo.com/news/stock-market-news-live-updates-october-14-115112610.html