U.S. stock markets opened higher but quickly turned negative on Wednesday, despite earnings from JPMorgan (NYSE:JPM), Blackrock (NYSE:BLK), Delta Air Lines (NYSE:DAL) and others that all came in ahead of expectations. .
Earnings beats, achieved in some cases largely by one-offs, were offset by the release of consumer inflation data that showed prices still running at an uncomfortably high level.
By 9:55 AM ET (1455 GMT), the Dow Jones Industrial Average was down 109 points, or 0.3%, at 34,269 points. The S&P 500 was down 0.1% but the Nasdaq Composite was up 0.4%. All three indices had started the week with two days of losses, partly on fears that the inflation numbers would force the Federal Reserve to take quicker action on interest rates.
Consumer prices rose by 0.4% on the month and by 5.4% on the year, in both cases 0.1% above expectations. The core prices index rose 0.2% on the month and 4.0% on the year, in line with expectations, but only thanks to a second sharp drop in airline fares in September as the summer wave of Delta-variant Covid-19 dampened enthusiasm for flying.
Covid didn't stop Delta Air Lines from delivering a profit, which even after adjusting for government support and other exceptional items came in at $194 million. Delta Air Lines (NYSE:DAL) stock fell 4.0% however, as investors reacted to its warning that fuel prices could pressure its margins in the current quarter.
However, it was JPMorgan (NYSE:JPM), the bellwether for a U.S. banking sector that is itself taken as a proxy for the U.S. economy, that grabbed headlines. The stock fell 2.0% after the bank relied heavily on the release of over $2 billion in reserves to beat street forecasts for earnings per share. Underlying performance in the bank's lending business was comparatively weak, and even the red-hot M&A advisory business cooled from a record second quarter. Revenue from trading bonds, currencies and commodities fell to its lowest in nearly two years.
JPMorgan's numbers were also saved by a strong performance from its asset management operations, as the public continued to throw money at buoyant equity markets in particular. That was also evident in Blackrock's quarterly numbers, which showed both assets under management and fee income rising more than expected. BlackRock Inc (NYSE:BLK) stock rose 2.5% but is still more than 10% off its summer peak.
Elsewhere, Apple (NASDAQ:AAPL) stock fell 1.2% after a report said it is planning to cut production of its flagship new iPhone 13 by over 10% due to component shortages, while hydrogen fuel cell company Plug Power (NASDAQ:PLUG) rose 9% after getting an upgrade from Morgan Stanley (NYSE:MS) analysts and announcing a new partnership with Airbus. Investing.com