Stocks End Mostly Lower, But Well Off Their Lows  Image: Bigstock Stocks closed mixed yesterday with the Dow and the S&P finishing modestly lower while the Nasdaq ended slightly higher. But it was a notable performance for all of the indexes as they each posted a strong recovery from a -2% intraday loss. Wednesday's hotter than expected inflation report weighed on stocks early on. And it's still on everyone's mind. In fact, many Fed watchers are ratcheting up their expectations for July's meeting. While 55% still believe the Fed will raise rates by 75 basis points (just like the last time), roughly 44% now believe the Fed could go as high as 100 basis points (a full percentage point), when their 2-day FOMC meeting concludes on July 27th. In other news, yesterday's Weekly Jobless Claims rose by 9,000 to 244K vs. the consensus for 234K. The smoother 4-week moving average came in at 235.75K. The PPI-Final Demand Report showed producer prices up 1.1% m/m and 11.3% y/y vs. estimates for 0.8% and 10.8% respectively. Less Food & Energy, it was up 0.4% and 8.2%. Less Food & Energy & Trade Services, it was up 0.3% and 6.4%. Today we'll get Retail Sales, the Empire State Manufacturing Index, Import and Export Prices, Industrial Production, Business Inventories, and Consumer Sentiment. And more earnings, including more big banks.
Yesterday's earnings for JPMorgan Chase disappointed with a negative EPS surprise of -3.16%, and a negative sales surprise of -3.05%. Morgan Stanley missed as well with a negative EPS surprise of -7.10%, and a negative sales surprise of -2.40%. Although, we did see some smaller financial companies post some solid beats.
Today we'll hear from Citigroup, Wells Fargo, BlackRock, U.S. Bancorp, and PNC Financial. Last month's lows continue to hold. And assuming they do again today, that will make it four weeks. There's plenty of optimism that the second half could see a strong rebound in GDP. And if so, that should result in a strong rally for stocks. The markets have been pricing in a worst-case scenario, i.e., a hard recession. But if it turns out to be softer and shorter, then the market will look even more oversold than it is right now. And with valuations at more than 2-year lows, many will be (and are) racing in to grab those bargains while they can. Best,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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