[BRIEFING.COM] Stocks are trading flat this afternoon, overcoming the modest losses they held at the opening bell, with the tech-heavy Nasdaq (+0.1%) showing relative strength. The Dow (unch) is hovering right at its unchanged mark and the S&P 500 (-0.1%) is slightly lower. All three major indices settled Wednesday at new record highs.
JPMorgan Chase (JPM 95.93, -0.91) and Citigroup (C 73.40, -1.54) kicked off the third quarter earnings season on a positive note this morning by reporting better-than-expected earnings and revenues. However, the two financial heavyweights have dropped 0.9% and 2.1%, respectively, as financial stocks struggle to extend their recent five-week run.
The S&P 500's financial sector (-0.4%) is hovering near the bottom of today's sector standings, surpassed only by the telecom services group, which has dropped 2.4%. AT&T (T 36.58, -1.62) has paced the telecom retreat, tumbling 4.2% in reaction to an announcement that its video subscribers declined for the third quarter in a row.
Consumer discretionary stocks within the S&P 500 are also underperforming, losing 0.4%. Ulta Beauty (ULTA 195.52, -12.37) is among the weakest components within the sector, losing 6.0%, after Cleveland Research downgraded the cosmetic and skincare retailer to 'Neutral' from 'Buy' early this morning.
Women's apparel retailer J.Jill (JILL 4.94, -4.99) has plunged even farther, tumbling over 50.0%, after lowering its forecasts for third quarter same-store sales.
On the up side, the top-weighted technology sector (+0.2%) trades ahead of the broader market, with Microsoft (MSFT 77.11, +0.69) showing particular strength. The tech giant has climbed 0.9% in today's session, extending its October gain to 3.5%. For comparison, the S&P 500 has added only 1.3% this month.
In Washington, President Trump signed an executive order on health care this morning aimed at providing more options for consumers and stepping up competition within the space. The health care sector trades a step below the broader market, showing a loss of 0.2%.
West Texas Intermediate (WTI) crude futures are down 2.0% at $50.26/bbl, unwinding a good chunk of this week's gains, despite the EIA reporting a larger-than-expected draw in U.S. crude stockpiles (2.8 million barrels actual vs 2.4 million barrels consensus). The energy sector, which typically moves in tandem with oil prices, is down 0.6%.
In the bond market, U.S. Treasuries are mixed with shorter-dated issues moving lower while longer-dated issues move higher. The benchmark 10-yr yield, which moves inversely to the price of the 10-yr Treasury note, is down one basis point at 2.34% while the 2-yr yield is up one basis point at 1.51%.
Reviewing Thursday's economic data, which has included the Producer Price Index for September and the weekly Initial Claims Report thus far:
- Producer prices rose 0.4% in September, which is in line with the Briefing.com consensus. Meanwhile, core producer prices rose 0.4%, which is above the 0.2% increase that the Briefing.com consensus expected. Year-over-year, core producer prices are up 2.2%.
- The key takeaway from the report is that it will feed the view that the Federal Reserve is on course to raise the fed funds rate again in December. The latter view stems from the understanding that the final demand index increased 2.6% for the 12 months ended in September, marking the largest rise since a 2.8% advance for the 12 months ended February 2012. Meanwhile, the final demand index less foods and energy increased 2.2% for the 12 months ended in September versus 2.0% for the 12 months ended in August.
- The latest weekly initial jobless claims count totaled 243,000 while the Briefing.com consensus expected a reading of 255,000. Today's tally was below the revised prior week count of 258,000 (from 260,000). As for continuing claims, they declined to 1.889 million from the revised count of 1.921 million (from 1.938 million).
- The key takeaway from the claims data is that it is consistent with a tight labor market, which some members of the Federal Reserve think poses an upside inflation risk.
Today's last economic report--the Treasury Budget for September--will be released at 14:00 ET.