Market Wrap
Published
The S&P 500 fell 1.2% as a hotter than expected September inflation report reignited rate-hike fears, with headline CPI rising to 3.7% year-over-year and core CPI at 2.6%, both above consensus, sending the five-year Treasury yield to its highest level since 2007 and the dollar index to an 18-month high. Citigroup added a December Fed rate hike to its forecast, reversing its prior call for no change this year, and traders added bets on further hikes through 2027.
The inflation surprise overshadowed an escalating Strait of Hormuz crisis. Two commercial vessels, a container ship and a dry bulk carrier, sank near the strait within roughly 24 hours after hitting mines or projectiles, US Central Command disputed Iranian claims of naval control over the waterway, and Houthi forces struck Aramco facilities in Dhahran and Jeddah along with King Khalid Airport, prompting Saudi Arabia to say it will not back down. Crude still settled up 1% at $95.09 a barrel. Gold fell nearly 2% to $4,073.73 and silver dropped almost 3% as higher yields outweighed safe-haven demand. Several Fed speakers, including Goolsbee, Barkin and Bowman, called the CPI report discouraging while stressing no precommitment to the October FOMC decision.
Health Care led all sectors, up 2.5%, with UnitedHealth, Bristol-Myers and Merck each gaining more than 3.7% on broad strength across pharma and managed care. Consumer Staples rose 2.1%, led by BJ's Wholesale, Walmart and Philip Morris. Technology was the worst performer, down 3.0%, dragged by Oracle's 9.0% slide and weakness across semiconductors, with the SOXX and SMH ETFs down more than 3.8%. Financials fell 0.7% despite gains in Cboe and CME, as Bank of America dropped 4.8% following a disappointing earnings miss, a $1.2 billion money-laundering fine and an $11.66 million OFAC sanctions settlement. Industrials, Real Estate and Utilities also declined.
Company News
- Bank of America posted Q3 EPS of $1.08, missing estimates, with revenue of $30.10 billion versus $31.32 billion expected, as investment banking and trading revenue softened.
- BlackRock reported Q3 EPS of $15.93, well above expectations, with revenue of $7.75 billion and 11% annualized organic base fee growth; shares rose.
- Morgan Stanley's Q3 EPS of $3.03 missed estimates, with revenue of $20.34 billion versus $20.87 billion expected.
- State Street's Q3 EPS of $3.69 topped forecasts, though revenue of $4.00 billion came in slightly light; the firm also agreed to acquire Santander's CACEIS Latin America securities servicing joint venture.
- Fastenal's Q3 EPS of $0.35 beat by a penny, though revenue of $2.46 billion fell short of expectations.
- Accenture guided to mid-single-digit revenue growth for fiscal 2027 and 2028 at its investor day, alongside plans to return at least $9.5 billion to shareholders in FY27.
- CoreWeave, Dell Technologies, Nebius Group and AST SpaceMobile posted double-digit declines amid renewed scrutiny of AI infrastructure spending; CoreWeave's CEO blamed the selloff on the market "acting irrationally."
- Paramount Skydance was the session's worst performer, falling roughly 24%.
- Flex completed its $4.4 billion acquisition of EPC Power, with plans to spin off its Cloud and Power Infrastructure segment as Axiom Solutions International in early 2027.
- STERIS agreed to acquire Xodus Medical for $2.1 billion in cash.
- Liquidia and United Therapeutics settled patent litigation, with Liquidia paying an aggregate $330.4 million.
- Trump announced a $50 billion Alaska LNG project backed by Taiwanese and South Korean investment, and a $21 billion GlobalFoundries semiconductor investment in New York with the US government taking an equity stake.
The Dow Jones Industrial Average closed down 0.19% at 51,570.37.