Stocks End Mixed Ahead Of This Morning's PPI Inflation Report Image: Shutterstock Stocks closed mixed, although mostly lower, with the Dow and S&P down, while the Nasdaq finished higher. It was the first day back after the 3-day weekend. Earnings from Goldman Sachs and Morgan Stanley painted a mixed picture with Goldman posting a negative EPS surprise of -36.8% on lower investment banking, and asset management revenue, while Morgan Stanley posted a positive EPS surprise of 4.80% on record wealth management revenue. Both companies saw a decline in sales and earnings vs. the same quarter last year. We also heard from United Airlines which posted a positive EPS surprise of 18.8%, and a positive sales surprise of 1.39%. They were up on both sales and earnings vs. the same quarter last year. Today we'll get earnings from financial heavyweights Charles Schwab, PNC Financial, and Discover Financial Services. We'll also hear from Alcoa after the close. They are in the Metal Products industry. Their industry has been one of the top ranked industries lately. Alcoa has long been considered the 'official' start to earnings season. (For those that are interested, AA is considered the 'official' start because it was once the first Dow component to report earnings. And Hewlett-Packard (now HP Inc.), has long been called the 'official' end of earnings season because it used to be the last of the Dow components to report earnings. Ironically, both AA and HPQ are no longer part of the Dow Jones Index. But after bookending earnings season for so long, that tradition has stuck, regardless of their current Dow non-membership status.) In other news yesterday, the Empire State Manufacturing Index fell to -32.9 from last month's -11.2 and views for -8.1. A reading below 0 indicates a contraction. It's already been in negative territory. But this was a sharp drop. Today we'll get MBA Mortgage Applications, the Housing Market Index, Retail Sales, and another look at inflation with the Producer Price Index (PPI) report. Last week's better than expected Consumer Price Index (CPI) inflation report was cheered by the market. And it underscored the continued decline we've been seeing in inflation. It's still too high. But it's been steadily ticking lower. And the market is hoping that trend continues with today's PPI report. After that, we'll get one more look at inflation with next week's Personal Consumption Expenditures (PCE) report, which is the Fed's preferred inflation gauge. And then the week after that, on Wednesday, 2/1, the Fed will make their announcement on their next interest rate hike. So each inflation report leading up to the FOMC announcement will be thoroughly scrutinized (and really, so will every economic report in the next couple of weeks), to try and glean how high the Fed might raise. And if they change their forecast on the terminal rate projections. In the meantime, all eyes will be on this morning's PPI report. See you tomorrow, Kevin Matras Executive Vice President, Zacks Investment Research |
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