Market indices fought bravely from a deep trough this morning ahead of the opening bell… only to reach the close modestly mixed. Such is trading in 2022 to this point: the Dow slid another -142 points on the day, -0.42%, while the Nasdaq gained fractionally, +0.03%, and the S&P 500 reached -0.30%. But considering the Dow had sunk more than -600 points early this session, we’ll still count it as a near-win.
The reason for the further chops to market valuations had to do with a
Producer Price Index (PPI)
at +11.3% year over year — off cycle highs but still treacherously high — along with a spike in
Initial Jobless Claims
that reached their highest level in 8 months. And if these choice samples of potential stagflation aren’t enough, we’re also seeing more and more analysts and pundits seriously considering a 1% interest rate hike from the Fed in a couple weeks.
We also saw earnings misses from big Wall Street banks
JPMorgan
JPM
and
Morgan Stanley
MS
ahead of today’s open, kicking off a Q2 earnings season less than auspiciously — and with many more financials reporting tomorrow morning, including
Citi
C
,
Wells Fargo
WFC
,
BlackRock
BLK
,
U.S. Bancorp
USB
and
Bank of New York – Mellon
BK
. Should they all go the way of JPM and MS, we may be in for a long, dreary earnings season.
On the other hand, we also saw a strong Q2 beat from
Taiwan Semiconductor
TSM
this morning, with its best quarterly earnings performance in two years and a revenue guide for Q3 that puts the Zacks consensus at the bottom end of its range. And if the chip-maker space can string together robust numbers like these — especially considering how the entire Tech space has been hammered year to date — perhaps we’ll be able to offset whatever weakness we’re likely to see in the financials.
Friday brings us our biggest day of the week in terms of economic data prints and Q2 earnings results. It won’t likely prove as important as Wednesday morning’s Consumer Price Index (CPI) headline of +9.1% inflation year over year — the highest in 41 years — but the sheer total of data points will provide plenty to draw from going into next week and beyond. With any luck (which has been in short supply these days) we may find reason to at last buy back into solid companies at far-discounted valuations.
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