Wall Street kicks off key week of bank earnings and CPI data with a mixed session

Wall Street ended mixed on Monday, with investors looking ahead to a key week highlighted by inflation data and quarterly results from major U.S. banks.

Stocks are coming off a solid weekly gain, driven largely by expectations for another strong earnings season. Equities were also helped by a halt in a relentless rout in the U.S. bond market, which was closed on Monday for the Columbus Day holiday.  

Meanwhile, oil prices rose following a flurry of developments since Friday in the Middle East and in the war between Russia and Ukraine.  

The benchmark S&P 500 slipped 0.1% to close at 7,807.36 points, while the tech-heavy NASDAQ Composite dipped 0.4% to settle at 27,245.90 points. The blue-chip Dow Jones Industrial Average added 0.4% to conclude at 51,850.31 points.  

"There was no shortage of geopolitical events that occurred over the weekend, but stocks seemed to lack a catalyst with the bond markets closed. Stocks have tended to react more to movements in interest rates than to oil – even though bonds are themselves often reacting to oil prices," Steve Sosnick, chief strategist at Interactive Brokers, told Investing.com.

"Quite frankly, stock traders are quite adept at ignoring inconvenient geopolitical news even if there are negative ramifications for key input prices," he added.

 

Micron dips while Meta shines, Salesforce gets a double upgrade

The S&P 500 technology sector fell 1% on Monday, weighed down by a decline in Micron Technology, Sandisk), and other chip stocks.

Micron shed 3.9% amid a combination of headwinds. Chinese memory chipmaker ChangXin Memory Technologies (CXMT) reported progress on a next-generation DRAM design that could boost storage density and intensify competition with South Korean chipmakers. 

Additionally, Micron faces possible strike activity in Taiwan. The island represents the backbone of the memory chipmaker’s DRAM and high-bandwidth memory production, where roughly 15k workers are employed across the company’s Taoyuan and Taichung sites.

Capping losses in tech and also boosting the S&P 500 communication services sector was a 3.4% rise in class A shares of Meta Platforms. The climb came amid the introduction of Meta’s Muse Wonder and Muse Wonder Full AI models on Monday, which the firm described as its most advanced models designed for personal and professional tasks.

Meta launched its initial Muse model in September, after which the personal AI agent rapidly became the top free app on platforms such as Apple’s App Store. The enthusiasm and traction around the agent helped Meta stock jump 26.7% last month. 

Elsewhere, Salesforce ticked up 2.1% and gave the blue-chip Dow a lift, after Bank of America upgraded the enterprise software provider’s stock by two notches to Buy from Underperform. 

BofA analyst Tal Liani said his previous concerns about AI affecting Salesforce had been eased after conversations with chief information officers and other market participants suggested that large enterprises were unlikely to replace platforms that house their business logic, data, workflows and compliance frameworks.

Earnings season critical test for Wall Street, eyes on CPI    

Away from Monday’s notable stock movers, market participants this week are gearing up for the Q3 earnings season, which will begin in earnest with reports from the biggest names in the U.S. banking industry. 

JPMorgan, Goldman Sachs, Wells Fargo, and Citi are on deck on Tuesday, followed by Bank of America and Morgan Stanley on Wednesday. Their reports will be scrutinized, especially in the wake of the recent U.S. bond market rout which drove up Treasury yields to multi-decade highs, including the 10-year yield which is used as the benchmark for corporate lending to mortgages to loans.

Critical banking metrics such as net interest income will be in focus, which will give an idea of how financial institutions were coping with elevated yields. Provisions for credit losses and charge-off rates will reveal whether American households were beginning to buckle under elevated borrowing costs or maintaining spending resilience. Investment banking fees will provide direct insight into corporate risk appetite, debt underwriting volume, and equity issuance recovery.   

Apart from the big banks, other well-known companies such as UnitedHealth, Johnson & Johnson, and Domino’s Pizza will also be reporting their quarterly results this week.

Aside from earnings, the U.S. economic calendar will also be in the spotlight this week, especially after recent data led to a sharp recalibration in Federal Reserve interest rate hike expectations. 

Traders will receive the September consumer price index (CPI) and producer price index (PPI) reports on Wednesday and Thursday, respectively.

"After a week that was largely devoid of catalysts like earnings and economic reports, we have plenty of both starting tomorrow," Interactive Brokers’ Sosnick told Investing.com. 

"Earnings season kicks off with big banks, JNJ, and UNH, and then we get most of the rest of the financial sector later this week. We also get CPI and PPI on Wednesday and Thursday, which should help clarify perceptions about the FOMC’s potential action at the meeting later this month," he said.

"Unfortunately, I am not optimistic that the first wave of earnings will lead to much clarity about the rest of earnings season. Banks are dependent upon factors that are uniquely important to their bottom lines – the level of interest rates, the shape of the yield curve, the amount of investment banking activity, and trading volumes and results," Sosnick noted.

"Those simply don’t offer many clues to how most other companies are performing. That said, their conference calls might offer some valuable insights into the state of the consumer, business lending, and credit quality," he added.

Oil climbs after deadly attack on Saudi airport

Turning to geopolitics, oil prices were higher on Monday.

President Donald Trump on Friday evening said, after what he called a "highly successful discussion" with Russian President Vladimir Putin, that the country would supply over 300,000 tons of diesel to U.S. and global oil markets, with another 500,000 tons to be supplied in November, and 1 million tons "immediately thereafter."

Trump on Sunday morning also said that there was an "energy ceasefire" effective immediately between Russia and Ukraine, though Ukrainian President Volodymyr Zelenskyy said Russia had broken the pact. Trump earlier on Saturday had told reporters in the U.S. that it was time for Ukraine to "get a new" president.

Overshadowing the Russia and Ukraine news was a deadly attack on Saturday by Iran-backed Houthis on the King Khalid International Airport in Riyadh, Saudi Arabia, that killed 13 people including a U.S. citizen.

Brent crude futures, the global benchmark, were up 1.3% to $106.09 as of 16:01 ET (20:01 GMT).

Pranav Kashyap contributed to this article