Stock Market Today: Inflation Data, Fed Minutes Fail to Budge Dow Much

Investors bored by a drought of news earlier this week had their prayers answered Wednesday with a mess of headlines – yet none of it really gave the market much impetus.

Today's early headline was September's CPI reading, which showed a 5.4% year-over-year in consumer prices that was slightly hotter than the 5.3% expected.

“Some of the transitory components are already moderating, such as airlines, apparels, and used autos. Disruptions due to supply chains not being able to keep up with the spike in demand may take longer but will eventually be fixed,” says Anu Gaggar, Global Investment Strategist for Commonwealth Financial Network. “However, higher rents and wages could prove to be stickier and eat into corporate margins.”

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BofA Global Research similarly warns about non-transitory risks. "While one month does not make a trend, this is an early signal of stronger persistent inflation pressures materializing, ultimately supporting continued above-target inflation over the medium term," a team of BofA economists says.

Later Wednesday, minutes of the Sept. 21-22 Federal Reserve meeting showed that it could begin a "gradual tapering process" starting as early as mid-November and ending by mid-2022.

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“In our view, the bar to get moving on asset purchase tapering is very low for the Fed, and in terms of the likely composition of tapering, there appears to be considerable agreement,” says Bob Miller, BlackRock’s head of Americas Fundamental Fixed Income. “Indeed, we already had the impression in July that the reduction in Treasury securities and MBS would occur at the same time, and assuming a November to June 2022 tapering timeline, this would imply a $15 billion reduction in the purchase pace per month, or a faster meeting-by-meeting adjustment schedule.”

The Dow Jones Industrial Average suffered a marginal loss to 34,377. The S&P 500 fared a bit better, up 0.3% to 4,363, while the Nasdaq Composite closed 0.7% higher to 14,571.

Financials (-0.6%) were Wednesday's worst sector. The Dow's performance was hampered by declines in components American Express (AXP, -3.5%), Visa (V, -0.7%) and JPMorgan Chase (JPM, -2.6%) – the latter of which fell despite announcing Street-beating revenues and profits to kick off the Q3 earnings season.

"JPM's pullback today in the face of a fairly positive earnings report does not suggest optimism for banks reporting through the remainder of this week," says David Keller, chief market strategist at StockCharts.com.

Speaking to the charts, Keller adds, "After peaking just above $170, the stock has now rotated below $165 yet again, completing a 'failed breakout' pattern that implies a lack of investor confidence. I would expect further backing and filling for stocks like JPM before any further upside is likely."

Other news in the stock market today:

• The small-cap Russell 2000 climbed 0.3% to 2,241.
• BlackRock (BLK, +3.8%) shares enjoyed a post-earnings lift today. In the third quarter, the world's largest asset manager – with $9.46 trillion in assets under management – reported earnings of $10.95 per share on $5 billion in revenues. Analysts, on average, were expecting earnings per share of $9.35 on $4.9 billion in revenues. CFRA analyst Catherine Seifert kept her Strong Buy rating on BlackRock: "Despite some tough year-to-year comparisons, we view BLK as a best-in-class asset manager with above-peer growth and profitability metrics set to support the shares' above-peer valuation," she says.
• Delta Air Lines (DAL, -5.8%) was also in focus after earnings. While the airline reported higher-than-expected adjusted profits of 30 cents per share on $9.15 billion in revenues, its results were still below 2019 levels. DAL also warned that higher fuel costs could weigh on its bottom line in the current quarter. Nevertheless, CFRA analyst Colin Scarola maintained his Strong Buy rating on Delta. "The current stock sell-off is hyperfocused on today's challenges (high oil prices and limited business and international travel), but investors will be better served to think about a year from now, by which time we expect lower fuel prices and a near full recovery for business/international," he wrote in a note.
• U.S. crude futures shed 0.2% to end at $80.44 per barrel, snapping a five-day winning streak.
• Gold futures gained 2% to settle at $1,794.70 an ounce.
• The CBOE Volatility Index (VIX) declined 6.8% to 18.50.
• Bitcoin prices firmed up by 3.6% to $57,272.90. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)

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