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End of Day Brief - Wednesday Oct 13 - Markets ignore negative sounding news

SP 5004363.80+13.15(0.30%)
10-yr Note +2/321.556
NYSEAdv 1973 Dec 1212 Vol 795.0 mln
NasdaqAdv 2469 Dec 1825 Vol 4.0 bln

Industry Watch

Strong: Utilities, Materials, Consumer Discretionary, Information Technology, Real Estate
Weak: Financials, Energy

Moving the Market

-- Market weathers negative-sounding developments

-- Apple (AAPL) likely to cut iPhone 13 production targets due to the chip shortage, according to Bloomberg

-- Delta Air Lines (DAL) says rising fuel costs will pressure profitability

-- Treasury yield curve flattens, undercutting the financials sector

-- Mixed CPI data for September

Market overcomes negative-sounding news

Dow -0.53 at 34377.81, Nasdaq +105.71 at 14571.63, S&P +13.15 at 4363.80

[BRIEFING.COM] The S&P 500 increased 0.3% on Wednesday, overcoming an early 0.5% decline in a busy news day. The Nasdaq Composite outperformed with a 0.7% gain amid relative strength in the growth stocks. The Dow Jones Industrial Average (unch) closed flat while the Russell 2000 increased 0.3%.

Briefly, the stock market weathered negative-sounding news out of Apple ($AAPL 140.91, -0.60, -0.4%) and Delta Air Lines ($DAL 41.03, -2.51, -5.8%), persistent inflation pressures indicated in the Consumer Price Index (CPI) report for September, and weakness in JPMorgan Chase ($JPM 161.00, -4.36, -2.6%) following its earnings report.

Nine of the 11 S&P 500 sectors closed higher, led by the utilities (+1.1%), materials (+0.8%), and consumer discretionary (+0.6%) sectors. Heavy individual support came Microsoft ($MSFT 296.31, +3.43, +1.2%), ($AMZN 3284.28, +36.95, +1.1%), and Alphabet ($GOOG 2758.00, +23.74, +0.9%).

The financials (-0.6%) and energy (-0.1%) sectors were the two holdouts amid some curve-flattening activity in Treasuries and lower oil prices ($80.51/BBL, -0.11, -0.1%).

The flattening activity was driven by growth concerns stirred by Apple and Delta. Briefly, Bloomberg reported that Apple is likely to slash its iPhone 13 production target by up to 10 million units because of the chip shortage, while Delta warned that rising fuel costs will pressure its ability to remain profitable in the fourth quarter.

The 10-yr yield decreased three basis points to 1.55%, while the 2-yr yield increased two basis points to 0.37%. The U.S. Dollar Index fell 0.5% to 94.05. Interestingly, the 10-yr yield hit 1.60% in a knee-jerk reaction to the CPI report, then bottomed at 1.53% a few hours later.

Total CPI was up 0.4% m/m in September ( consensus +0.3%), which was hotter than expected. Core CPI, which excludes food and energy, was up 0.2% m/m ( consensus 0.3%), which was better than feared. On a year-over-year basis, they were up 5.4% and 4.0%, respectively.

Separately, the FOMC Minutes from the September meeting shed some light on how much the Fed would taper asset purchases if begun later this year. Specifically, asset purchases would be reduced on a monthly basis by $15 billion ($10 bln in Treasury securities and $5 bln in agency MBS) until the middle of 2022.

Reviewing Wednesday's economic data:

  • Total CPI in September was up 0.4% month-over-month ( consensus +0.3%) following a 0.3% increase in August, and core CPI, which excludes food and energy, was up 0.2% ( consensus +0.3%) following a 0.1% increase in August.
    • The key takeaway from the CPI report was the year-over-year figures, which showed persistent inflation pressures. Total CPI was up 5.4%, versus 5.3% in August, and core CPI held steady at a lofty 4.0%.
  • The weekly MBA Mortgage Applications Index increased 0.2% following a 6.9% decline in the prior week.

Looking ahead, investors will receive the Producer Price Index for September and the weekly Initial and Continuing Claims report on Thursday.

  • S&P 500 +16.2% YTD
  • Russell 2000 +13.5% YTD
  • Dow Jones Industrial Average +13.1% YTD
  • Nasdaq Composite +12.3% YTD

Source: (

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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