Wall Street On Backfoot As PPI Print, JPMorgan Earnings Loom: This Strategist Expects Positive Market Performance, But With Muted Returns

U.S. index futures point to a modestly lower opening on Friday as traders hope for better tidings on the wholesale prices front. Thursday’s slightly hotter-than-expected consumer price inflation data kept sentiment subdued throughout the session before the major averages closed modestly lower. Following the inflation data, Harris Financial Group Managing Partner Jamie Cox said, “Disinflation continues, but anyone who thought the Fed was going to lower rates by another .50 basis points in November is dead wrong.”

“When interest rates aren't high enough to lower growth, they aren't high enough to stifle inflation completely either.  The Fed will lower rates, but at a measured pace from here,” he added.

Tesla, Inc.‘s TSLA Robotaxi event failed to kickstart a rally in the stock. JPMorgan Chase & Co. JPM is set to kickstart big bank earnings this season and its earnings are seen as a barometer of how healthy the sector is.

Futures	Performance (+/-)
Nasdaq 100	-0.32%
S&P 500	-0.19%
Dow	-0.16%
R2K	-0.43%

In premarket trading on Friday, the SPDR S&P 500 ETF Trust SPY edged down 0.10% to $575.53 and the Invesco QQQ ETF QQQ moved down 0.20% to $491.60, according to Benzinga Pro data.

Cues From Last Session:

With inflation readings coming slightly ahead of expectations across the board and jobless claims jumping to the highest in over a year due to Hurricane Helene, stocks opened Thursday’s session lower. The reports sent bond yields surging higher.

The 30-stock Dow Jones Industrial Average languished in the red throughout the session, while the tech-heavy Nasdaq Composite Index and the broader S&P 500 Index remained below the flat for the bulk of the day.

In the process, the Dow and the S&P 500 Index pulled back from their record highs.

All but three of the S&P 500 sector classes ended in the red, with the holdouts being energy, IT and material stocks,

Index	Performance (+/)	Value
Nasdaq Composite	-0.05%	18,282.05
S&P 500 Index	0.21%	5,780.05
Dow Industrials	-0.14%	42,454.12
Russell 2000	-0.55%	2,188.42

Insights From Analysts:

LPL Chief Technical Strategist Adam Turnquist weighed in on the bull market, which is completing two years on Oct. 12. Since then, the S&P 500 has gained 62% while registering 44 record highs, he noted.

The strategist said low volatility has been a welcome personality trait of this bull market. The maximum drawdown for the S&P 500 since its Oct. 12, 2022, closing low has only been 10.3%, running below the average maximum drawdown of all bull markets of -14.2%, he added.

Looking ahead, Turnquist said most bull markets remain bull markets into their third year of life. Since 1950, the duration of a bull market has averaged 61 months, excluding the current bull market, with the shortest lasting for 21 months running from March 2020 to January 2022, he said.

That said, the current 27.2% annualized return is running relatively high compared to other bull markets, Turnquist said. “History implies that if this bull market continues, investors should expect positive, but likely more muted annualized returns going forward,” he added.

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Upcoming Economic Data

• The Labor Department is scheduled to release the producer price inflation report for September at 8:30 a.m. EDT. The headline and core producer prices may have increased 0.1% and 0.2%, respectively, in September. This compares to the 0.2% and 0.3% rates in August. The annual rates of headline and core producer price inflation are expected at 1.6% and 2.7%, respectively, versus 1.7% and 2.4% in August.
• Among the Fed officials speaking on Friday are:
  • Chicago Fed President Austan Goolsbee: 9:45 a.m. EDT
  • Dallas Fed President Lorie Logan: 10:45 a.m. EDT
  • Federal Reserve Governor Michelle Bowman: 1:10 p.m. EDT
• The University of Michigan’s preliminary consumer sentiment index for October at 10 a.m. EDT. The headline consumer sentiment index is expected to rise from 70.1 in September to 71 in October. Traders may also focus on the one-, two- and five-year inflation expectations readings.

Stocks In Focus:

• Tesla plunged for 5.60% in premarket trading following the company’s Robotaxi event. Uber Technologies, Inc. UBER and Lyft, Inc. LYFT, which offer ride-hailing services, moved in sympathy.
• BlackRock, Inc. BLK, JPMorgan, Wells Fargo & Company WFC, Fastenal Company FAST and Bank of New York Mellon Corporation BK are among the notable companies due to report their quarterly results ahead of the market open.

Commodities, Bonds And Global Equity Markets:

Crude oil futures fell after Thursday’s strong advance, while gold futures firmed up. Bitcoin BTC/USD traded nearly flat under $61K. The 10-year Treasury note yield was little changed at 4.092%.

Sentiment in Asia was muted as China stocks fell sharply and the U.S inflation data surprised to the upside. The Hong Kong market was closed on account of a public holiday.

The European markets were mixed, with traders reacting to mostly weak data released by the U.K.

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