The stock market rally had a generally positive week. The S&P 500 and Dow Jones hit record highs while the Nasdaq cleared key levels. The small-cap Russell 2000 rebounded from a key test. A number of leading stocks flashed buy signals.
Tesla tumbled after its long-awaited robotaxi event failed to impress. JPMorgan Chase and Wells Fargo jumped on their Q3 earnings, while Delta Air Lines rose for the week despite mixed results.
Insurance stocks were little changed overall after ups and downs as Hurricane Milton slammed into Florida. Homebuilders faltered as Treasury yields kept rising on hot inflation data.
Dow Jones, S&P 500 Hit Highs
The S&P 500 and Dow Jones hit all-time highs while the Nasdaq topped a short-term level. That's despite Treasury yields continuing to soar. A decent batch of leading stocks flashed buy signals during the week, including several tech growth names. The small-cap Russell 2000 rebounded from the 50-day line to end higher. Tesla was a notable loser for the week. So were homebuilders, as mortgage rates head higher again. Insurers held up despite hurricanes. JPMorgan Chase, Wells Fargo and Delta Air Lines were key earnings reports.
Fed Rate Cut Still On Track
Hotter-than-expected CPI and PPI inflation played second fiddle to an unexpected surge in initial jobless claims. The upshot is that a quarter-point rate cut on the next Federal Reserve meeting looks even more certain than it did before. New claims spiked by 33,000 to 258,000 in the week through Oct. 5. Hurricanes and the Boeing strike played a role, but it's not clear how much. Further, economists expect jobless claims to rise to around 300,000 in coming weeks amid the effects of Hurricane Milton. The CPI rose 0.2% on the month and 2.4% from a year ago, both above forecasts, though the 12-month inflation rate dipped from 2.5%. The core CPI rose 0.3% from August, while the 12-month increase unexpectedly edged up to 3.3%. Friday's PPI data showed an in-line 0.2% gain in core wholesale prices, but upward revisions to prior months' data meant the 12-month core PPI inflation rate jumped to 2.8% in September from 2.4%. But Wall Street isn't worried that disinflation has run its course.
Tesla Robotaxi Isn't Hailed
CEO Elon Musk showed off a Cybercab and Robovan at Thursday night's robotaxi event while also proclaiming that fully autonomous Tesla vehicles will be on the roads in Texas and California next year. For many years, Musk has said that Tesla would achieve self-driving "this year" or "next year." Analysts criticized Musk for failing to go into detail about Full Self-Driving improvements, not providing updates on a ride-hailing service, and notably not even mentioning a new "affordable" EV that he's hinted at before. Musk did say he expects the Cybercab price tag will be below $30,000, with production starting "before 2027." The Tesla head also showed off the latest Optimus robot, with a handful walking around the Warner Bros. lot on Thursday. Musk expects the humanoid to cost around $25,000-$30,000 when produced at scale. Tesla sold off sharply.
Taiwan Semi Sales Surge
Taiwan Semiconductor Manufacturing said September sales surged nearly 40% year over year, topping Wall Street estimates. Demand for AI processors helped fuel the increase. The world's largest contract chipmaker plans to report its third-quarter results on Oct. 17. Its Q3 report will be a barometer for sales at its major customers, which include Apple, Nvidia, AMD and many more fabless semiconductor companies. TSM shares rose. Meanwhile, AMD, Astera Labs, Broadcom and Nvidia touted their latest AI chips at media events. Astera Labs soared after a long downtrend while Broadcom and Nvidia flashed buy signals. AMD fell.
JPMorgan, Banks Jump On Earnings
JPMorgan Chase reported a 4% EPS decline with revenue up 4% to $41.4 billion, both beating views. The Dow Jones bank saw its assets under management jump by 23% to $3.9 trillion. Net interest income rose 3%, while JPMorgan raised its full-year NII target. Wells Fargo earnings unexpectedly edged up 2%, but revenue fell 2% to $20.37 billion, just missing. Wells' NII fell 11% from last year. JPMorgan increased credit loss provisions while Wells cut its reserve slightly. Both JPM stock and WFC shares jumped, flashing buy signals. BlackRock and Bank of New York Mellon on Friday also beat, pushing shares to fresh highs.
DOJ Mulls Google Breakup
The Justice Department told a federal judge that it may ask for a breakup of Google-parent Alphabet as a possible antitrust remedy. The DOJ filing also said antitrust officials could recommend that Google open up its core data that it uses for search research and artificial intelligence tools. On Aug. 5, Judge Amit Mehta ruled that Google illegally maintained a monopoly over online search services and prevented rivals from developing their own products. A key part of the ruling centered on multibillion dollar payments that Google makes to Apple and others to be the default search engine on the iPhone and browsers such as Firefox. Those payments may be barred as part of the judge's ultimate ruling. In a blog, Google called the DOJ's potential plan "radical." Meanwhile, a U.S. District Court judge on Oct. 7 ruled that Google must let third-party app stores such as the Epic Games Store onto Google Play, ensure parity of apps across stores, and crucially not require use of Google Play billing. The ruling by U.S. District Judge James Donato came after a jury found Google's Android a monopoly in app distribution and in-app billing in December 2023. Google said it will appeal.
Delta Shrugs Off Weak Earnings, Guidance
Delta Air Lines earnings slumped 26% to $1.50 per share, slightly worse than feared. Revenue rose 1% to $15.677 billion, just beating. But the airline, kicking off Q3 results for the group, gave disappointing guidance for Q4, citing the upcoming election. Delta said holiday bookings were strong. As previously disclosed, the CrowdStrike global IT outage delivered a $380 million hit to Delta's revenue. Shares initially tumbled Thursday on results but erased losses, rising solidly for the week, near a buy point.
News In Brief
General Motors doubled down on electric vehicles at its investor day, while seeking to reassure that profits on traditional vehicles with internal combustion engines have not peaked. The auto giant said that EV losses may have peaked this year. It outlined rapidly improving profitability as newer and cheaper electric cars roll out and battery costs decrease. Investors shrugged off GM's EV vision, with the stock rising a tad above the 50-day line.
Pfizer jumped on a report activist investor Starboard Value took a roughly $1 billion stake in the company. But shares pared gains as two former top Pfizer executives, initially linked with Starboard's effort, announced their support for current management. At least one analyst says there's little the activist fund can do to make significant changes at Pfizer due to hefty debts, looming losses of exclusivity and upcoming competition.
Honeywell announced plans to spin off its advanced materials division into an independent, publicly-traded U.S. company by early 2026. The Dow giant expects the business to generate $3.7 billion to $3.9 billion in revenue in 2024. The move is intended to focus Honeywell on aviation, automation and the energy transition.
Boeing talks with its machinist union broke down, with the Dow aerospace giant pulling its offer to the 33,000 striking workers. Both sides, reportedly far apart on terms, are preparing for an extended strike. Shares fell to the lowest level since Oct. 2022.
BlackRock beat third-quarter views with assets under management nearly hitting $11.5 trillion. Shares rose to a fresh 52-week high.
