(Bloomberg) — Stocks wavered after cautious outlooks from some of Wall Street’s biggest banks. Brent oil fell below $70 on oversupply fears.
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Following a rally to start the week, the S&P 500 struggled to make much headway. JPMorgan Chase & Co. tumbled 6.5% as its President Daniel Pinto said analysts are being too optimistic in projecting next year’s expenses and net interest income. His remarks follow guidance from Goldman Sachs Group Inc.’s chief David Solomon Monday that his firm’s third-quarter trading revenue could fall 10%. Tesla Inc. climbed on a bullish analyst call. Oracle Corp. hit an all-time high amid solid results.
Treasuries rose after a solid $58 billion sale of three-year notes.
Traders also kept a close eye on news that regulators will make changes to their bank-capital rules proposal, cutting the expected impact to the biggest banks by half and exempting smaller ones from large portions of the measure. In the run-up to key inflation data, investors are also gearing up for the first debate between former President Donald Trump and Vice President Kamala Harris.
The S&P 500 was little changed. The Nasdaq 100 rose 0.4%. The Dow Jones Industrial Average slid 0.4%. A Bloomberg gauge of the “Magnificent Seven” megacaps climbed 1%. The Russell 2000 of small firms retreated 0.8%. The KBW Bank Index sank 2.9%.
Treasury 10-year yields dropped four basis points to 3.66%. The dollar wavered.
US equities are unlikely to slump 20% or more as the risk of a recession remains low against expected interest-rate cuts from the Federal Reserve, according to Goldman Sachs Group Inc. strategists.
The team led by Christian Mueller-Glissmann said while stocks could decline into the year end — hurt by higher valuations, a mixed growth outlook and policy uncertainty — the odds of an outright bear market are slim as the economy is also in part being supported by a “healthy private sector.”
In the run-up to the consumer price index, a 22V Research survey showed that 56% of respondents believe that core CPI is on a Fed-friendly glide path. The share of investors expecting a recession has stayed elevated though.
Aside from that, 48% of investors expect the market reaction to CPI to be “mixed/negligible,” 32% said “risk-on” and only 20% “risk-off.”
Corporate Highlights:
Apple Inc. lost its court fight over a €13 billion ($14.4 billion) Irish tax bill and Google lost its challenge over a €2.4 billion fine for abusing its market power, in a double boost to the European Union’s crackdown on Big Tech.
Oracle Corp. soared after the software giant reported profit and bookings that topped estimates, signaling that artificial intelligence demand continues to boost its cloud computing business.
Teva Pharmaceutical Industries Ltd. is set to be hit with an antitrust fine from the European Union over allegations it tried to talk down rival makers of a multiple sclerosis drug.
Southwest Airlines Co. Chairman Gary Kelly is stepping down along with six directors, a dramatic move after the carrier faced calls for a strategic overhaul from activist investor Elliott Investment Management.
German carmakers are sinking deeper into a crisis undermining the future of the country’s most important industry, with BMW AG warning that profits will get hit by a costly brake problem and Volkswagen AG scrapping job protections that workers have enjoyed for three decades.
Volkswagen AG is ending job protections for auto workers in Germany as part of its cost-cutting push, setting up a showdown with unions as the country’s most important industry fights for its future.
Key events this week:
US CPI, Wednesday
Japan PPI, Thursday
ECB rate decision, Thursday
US initial jobless claims, PPI, Thursday
Eurozone industrial production, Friday
Japan industrial production, Friday
U. Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
The S&P 500 was little changed as of 1:24 p.m. New York time
The Nasdaq 100 rose 0.4%
The Dow Jones Industrial Average fell 0.4%
The MSCI World Index fell 0.1%
KBW Bank Index fell 2.9%
Bloomberg Magnificent 7 Total Return Index rose 1%
The Russell 2000 Index fell 0.8%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.1% to $1.1023
The British pound was little changed at $1.3071
The Japanese yen rose 0.5% to 142.46 per dollar
Cryptocurrencies
Bitcoin rose 0.4% to $57,225.57
Ether rose 0.6% to $2,356.87
Bonds
The yield on 10-year Treasuries declined four basis points to 3.66%
Germany’s 10-year yield declined four basis points to 2.13%
Britain’s 10-year yield declined four basis points to 3.82%
Commodities
West Texas Intermediate crude fell 4.2% to $65.85 a barrel
Spot gold rose 0.4% to $2,515.43 an ounce
This story was produced with the assistance of Bloomberg Automation.
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