U.S. stocks fell after a report showed U.S. year-ahead inflation expectations rose for the first time in seven months. The dollar gained and Treasuries fell.
The S&P 500 closed near lows of the day, falling more than 2 per cent. The growth-sensitive Nasdaq 100 posted the steepest losses, dropping just over 3 per cent as Treasury yields climbed, with the two-year rate rising back to 4.5 per cent. Both indexes posted their first weekly declines this month.
Equity markets turned sharply lower after a University of Michigan survey showed year-ahead inflation expectations rose in early October and the long-term outlook also crept up. The uptick is potentially worrisome for the Federal Reserve’s efforts to keep views anchored. It also follows data a day earlier that showed a key measure of consumer prices accelerated in September to a 40-year high. On Thursday, however, stocks roared back from early losses in one of the biggest reversals on record.
“Yesterday you had this amazing, powerful intraday rally that was completely wrong,” said Phil Orlando, chief equity market strategist at Federated Hermes. “Then you look at the Michigan numbers this morning that’s consistent with what we’re seeing in the economy, and the stock market now is down to reflect that number. That’s correct.”
Corporate America offered some bright spots, with big banks including JPMorgan Chase & Co. and Wells Fargo & Co. rising after reporting results, while Morgan Stanley fell as equity trading revenue disappointed. UnitedHealth Group Inc. shares gained after the health-care giant beat profit forecasts in the third quarter and raised its outlook for the year.
Earnings next week will provide clues on the strength of a swathe of companies, including Bank of America Corp., Goldman Sachs Group Inc., Johnson & Johnson, Netflix Inc., Tesla Inc. and United Airlines Holdings Inc.
In the latest Fed comments, officials suggested they’re ready to hike rates higher than previously planned. Kansas City Fed President Esther George said the terminal rate may need to be higher to cool prices. San Francisco Fed’s Mary Daly said she’s “very supportive” raising to restrictive levels and to between 4.5 per cent and 5 per cent “is the most likely outcome.”
Forecasts they released last month showed rates reaching 4.4 per cent by year end and 4.6 per cent next year, from a current target range of 3 per cent to 3.25. Swaps traders have boosted wagers for rate hikes over the past week following strong payrolls and hot inflation readings, with the market leaning toward back-to-back jumbo hikes at the next two meetings and a high above 4.9 per cent next year.
“A lot of investors are looking at inflation to get guidance on what the Fed is going to do, to find the bottom in the market once the Fed pivots,” Jerry Braakman, chief investment officer and president of First American Trust, said in an interview. “But looking at CPI, unemployment, there’s obviously a lot of heat in the economy. Inflation is going to take some time to come down.”
In the U.K., bonds and the pound fell to end another tumultuous week. Gilts slid as Prime Minister Liz Truss confirmed speculation she will U-turn on a planned freeze on corporation tax. The Bank of England ended its emergency bond purchases on Friday, buying £1.45 billion of long-dated and inflation-linked gilts. In the wake of that, 30-year yields rose 23 basis points at 4.78 per cent, after swinging from a drop of over 30 basis points earlier.
Elsewhere, oil posted a weekly loss as inflation-fighting measures and muted Chinese demand soured the market’s outlook, blunting some of the sting from OPEC’s upcoming supply curtailments.
Some of the main moves in markets:
Stocks
The S&P 500 fell 2.3 per cent as of 4 p.m. New York time
The Nasdaq 100 fell 3.1 per cent
The Dow Jones Industrial Average fell 1.3 per cent
The MSCI World index fell 1.3 per cent
Currencies
The Bloomberg Dollar Spot Index rose 0.7 per cent
The euro fell 0.5 per cent to US$0.9729
The British pound fell 1.2 per cent to US$1.1186
The Japanese yen fell 1 per cent to 148.60 per dollar
Cryptocurrencies
Bitcoin fell 1.1 per cent to US$19,177.75
Ether rose 0.4 per cent to US$1,298.58
Bonds
The yield on 10-year Treasuries advanced seven basis points to 4.02 per cent
Germany’s 10-year yield advanced six basis points to 2.35 per cent
Britain’s 10-year yield advanced 14 basis points to 4.34 per cent
Commodities
West Texas Intermediate crude fell 3.7 per cent to US$85.82 a barrel
Gold futures fell 1.7 per cent to US$1,648.80 an ounce
TORONTO – Restaurant Brands International Inc. reported net income of US$357 million for its third quarter, down from US$364 million in the same quarter last year.
The company, which keeps its books in U.S. dollars, says its profit amounted to 79 cents US per diluted share for the quarter ended Sept. 30 compared with 79 cents US per diluted share a year earlier.
Revenue for the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs, totalled US$2.29 billion, up from US$1.84 billion in the same quarter last year.
Consolidated comparable sales were up 0.3 per cent.
On an adjusted basis, Restaurant Brands says it earned 93 cents US per diluted share in its latest quarter, up from an adjusted profit of 90 cents US per diluted share a year earlier.
The average analyst estimate had been for a profit of 95 cents US per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
ST. JOHN’S, N.L. – Fortis Inc. reported a third-quarter profit of $420 million, up from $394 million in the same quarter last year.
The electric and gas utility says the profit amounted to 85 cents per share for the quarter ended Sept. 30, up from 81 cents per share a year earlier.
Fortis says the increase was driven by rate base growth across its utilities, and strong earnings in Arizona largely reflecting new customer rates at Tucson Electric Power.
Revenue in the quarter totalled $2.77 billion, up from $2.72 billion in the same quarter last year.
On an adjusted basis, Fortis says it earned 85 cents per share in its latest quarter, up from an adjusted profit of 84 cents per share in the third quarter of 2023.
The average analyst estimate had been for a profit of 82 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
TORONTO – Thomson Reuters reported its third-quarter profit fell compared with a year ago as its revenue rose eight per cent.
The company, which keeps its books in U.S. dollars, says it earned US$301 million or 67 cents US per diluted share for the quarter ended Sept. 30. The result compared with a profit of US$367 million or 80 cents US per diluted share in the same quarter a year earlier.
Revenue for the quarter totalled US$1.72 billion, up from US$1.59 billion a year earlier.
In its outlook, Thomson Reuters says it now expects organic revenue growth of 7.0 per cent for its full year, up from earlier expectations for growth of 6.5 per cent.
On an adjusted basis, Thomson Reuters says it earned 80 cents US per share in its latest quarter, down from an adjusted profit of 82 cents US per share in the same quarter last year.
The average analyst estimate had been for a profit of 76 cents US per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
