Wall Street Today | Stocks Almost Flat as JPMorgan's Dimon Warns of Stickier Inflation

Moomoo Recap US wrote a column · Jan 12 15:19

RECAP

Investors Weigh Risks

US stocks once again closed little changed Friday as investors weighed positive inflation signs from the latest producer price index against the warnings gleaned from banks and other companies which were among the first to report fourth-quarter earnings.

The $S&P 500 Index(.SPX.US)$ closed less than 0.1% higher, while the $Nasdaq Composite Index(.IXIC.US)$ ended almost flat for the day. The $Dow Jones Industrial Average(.DJI.US)$ slipped 0.3%.

While $JPMorgan(JPM.US)$ reported its highest ever annual profit in 2023, Chairman and Chief Executive Officer Jamie Dimon cited risks to the economy that could slow progress in the US Federal Reserve's fight to cool inflation.

"It is important to note that the economy is being fueled by large amounts of government deficit spending and past stimulus," Dimon said in the company's earnings release Friday. "This may lead inflation to be stickier and rates to be higher than markets expect. On top of this, there are a number of downside risks to watch."

Dimon cited risks from the Fed's quantitative tightening, which is draining over $900 billion in liquidity from the financial system annually. Another risk is the ongoing wars in Ukraine and the Middle East that he said, have the potential to disrupt energy and food markets, migration, and military and economic relationships, apart from their "dreadful human cost."

Meanwhile, $Citigroup(C.US)$ expects a 20,000 net reduction in its workforce over the medium term, according to a presentation slide on the company's earnings results released Friday that didn't give a more specific time frame. In the case of $Wells Fargo & Co(WFC.US)$, Chief Executive Officer Charlie Scharf cited "modest deterioration" in credit, as the company warned that 2024 net interest income could be about 7% -9% lower than the 2023 level of $52.4 billion."

MACRO

PPI Unexpectedly Falls

The prices companies get for goods and services unexpectedly fell in December, fueling hopes that those declines could soon be passed on to consumers, helping cool inflation. The producer price index fell 0.1% in December, according to the US Labor Department. Economists surveyed by Dow Jones had expected a monthly gain of 0.1%, CNBC reported.

SECTORS

Oil at One-Week High

Crude oil closed at a one-week high after the United States and the United Kingdom retaliated against Houthi rebels' persistent attacks on ships in the Red Sea, heightening concerns over disruptions to the supply of fuel. The US and its allies bombed several Houthi targets. That also sent fuel shipping stocks higher.

Wall Street Today | Stocks Almost Flat as JPMorgan's Dimon Warns of Stickier Inflation

Bitcoin ETF Optimism Wanes

Meanwhile, bitcoin fell, dragging the share prices of companies that mine the cryptocurrency, along with $Coinbase(COIN.US)$, a provider of end-to-end financial infrastructure and technology for the cryptoeconomy. Prices fell as optimism faded that the approval of exchange-traded funds that directly invest in bitcoin could spur a surge in demand from retail and institutional investors.

COMPANIES

UnitedHealth's Higher Medical Costs

$UnitedHealth(UNH.US)$ shares fell after the company reported a higher-than-expected spending on patients' healthcare services in the fourth quarter, sending its stock and that of its peers lower. The company's medical care ratio, which measures medical expenses paid as a percentage of insurance premiums, reached 85% in the fourth quarter. That's higher than the 84.1% expected by analysts surveyed by FactSet, according to a Dow Jones report.

UnitedHealth rival $Humana(HUM.US)$ saw its shares declined 3.4%, while $Elevance Health(ELV.US)$ fell 1.5%. $Centene(CNC.US)$ slid 0.8%, as $The Cigna Group(CI.US)$ also slipped 0.8%.

Delta Air's Lower Guidance

$Delta Air Lines(DAL.US)$ shares slumped 9% after the company lowered its earnings guidance, overshadowing its better-than-expected fourth quarter results. That hurt sentiment across the airline industry, sending shares of Delta's competitors lower.

$American Airlines(AAL.US)$ tumbled 9.5% while $United Airlines(UAL.US)$ plunged 10.6%.

Source: Bloomberg, Dow Jones, CNBC, Reuters

Disclaimer: This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Indexes are unmanaged and cannot be directly invested into. Past performance is no indication of future results. Investing involves risk and the potential to lose principal. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content. See this link for more information.

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