Stocks closed mixed on Friday as the S&P 500 (^GSPC) officially entered correction territory to cap off a tough week for markets.
The S&P 500 closed down about 0.5% despite notching gains earlier in the session, while the Dow Jones Industrial Average (^DJI) dropped about 1.2%, or more than 350 points.
The Nasdaq Composite (^IXIC) held on to gains, closing up about 0.4%, as earnings from Amazon (AMZN) and Intel (INTC) eased some concerns around Big Tech. The index entered into a correction earlier this week amid a sell-off fueled by mixed earnings from megacap techs.
On Friday, the Federal Reserve's preferred inflation metric showed prices over the prior month jumped by the most since May while annual price increases continued to cool in September, sharpening the prospects for the central bank to keep interest rates "higher for longer."
Read more: What the Fed rate-hike pause means for bank accounts, CDs, loans, and credit cards
The "Core" Personal Consumption Expenditures (PCE) Index, which excludes the volatile food and energy categories, showed prices rose 0.3% in September and 3.7% from the prior year, data released by the Commerce Department on Thursday showed. The 0.3% increase in core PCE was driven by categories like cars, prescription drugs, and travel.
On a headline basis, which includes all categories, PCE rose 3.4% over last year and 0.4% month over month. September's annual rise in "core" PCE was the smallest since May 2021 and marks the third straight month prices have increased at a slower annual rate.
Stocks closed mixed on Friday with the S&P 500 (^GSPC) officially entering correction territory after falling about 0.5% to close out a tough week for markets.
The Dow Jones Industrial Average (^DJI) dropped roughly 1.2%, or more than 350 points, while the Nasdaq Composite (^IXIC) held on to gains, closing up roughly 0.4%. The index entered into a correction earlier this week.
The moves come after the Federal Reserve’s preferred inflation metric showed prices over the prior month jumped by the most since May while annual price increases continued to cool in September, sharpening the prospects for the central bank to keep interest rates “higher for longer.”
Next week will be a busy one for investors with the Federal Reserve’s two-day policy meeting on tap, along with a slew of high-profile earnings reports and economic data:
The S&P 500 (^GSPC) inched closer to entering correction territory, falling about 0.6% in late afternoon trading after notching gains earlier in the session.
The Dow Jones Industrial Average (^DJI) also saw losses escalate, dropping roughly 1.2%, or more than 400 points.
The Nasdaq Composite (^IXIC) held higher, but was still off earlier session highs, up roughly 0.2%. The moves come as positive earnings from Amazon (AMZN) and Intel (INTC) eased some concerns around Big Tech following mixed results from megacap names like Google parent company Alphabet (GOOG, GOOGL).
Charter Communications (CHTR), which saw shares plunge nearly 10% after reporting earnings on Friday, said it lost about 100,000 subscribers due to its cable dispute with Disney (DIS) earlier this fall.
“The overall impact to customer relationships was less than we expected, facilitated in part by the wide availability of over-the-top alternative,” Charter CFO Jessica Fischer said on the company’s earnings call.
Residential video customers decreased by 320,000 in the third quarter of 2023, a 6% decline compared to a loss of 211,000 customers in the year-ago period, “partly driven by video disconnects related to the temporary loss of Disney programming in early September.”
The two companies had hit a stalemate in contract negotiations over whether Disney should give Charter subscribers free access to its ad-supported streaming services as part of the telecom giant’s cable packages. The blackout impacted a slew of high-profile sporting events including the US Open and arrived on the heels of the NFL’s debut — upping the pressure for both sides to make a deal.
On Sept. 11, the companies announced they had reached an agreement to end the media blackout. As part of the deal, Charter will offer some Disney streaming services — the ad-supported version of Disney+, ESPN+, and ESPN’s yet-to-be-launched direct-to-consumer offering — as part of select cable packages at no additional cost to the consumer.
But the Disney dispute clearly wasn’t the only challenge for the cable giant this quarter.
Charter missed estimates for quarterly broadband additions amid increased competition and also raised its annual expenses forecast. The company now expects full-year 2023 capital expenditures, excluding line extensions, to total about $7.2 billion, an increase from the previously expected range of $6.5 billion to $6.8 billion.
Free cash flow also disappointed with the company reporting Q3 free cash flow of $1.1 billion, a decrease from $1.5 billion in the prior-year period, “primarily due to higher capital expenditures, mostly driven by Charter’s network evolution and expansion initiatives.”
FTX founder Sam Bankman-Fried doubled down on Friday that he did not commit fraud and did not take customer funds.
As Yahoo Finance’s Alexis Keenan reports:
Sam Bankman-Fried began his defense against criminal charges that he stole billions from his cryptocurrency exchange and spent the money on investments, political donations, and real estate.
He did, however, say that he “made a number of small mistakes and a number of big mistakes.” His biggest mistake, he said, was not having a chief risk officer.
“A lot of people got hurt,” he said.
His highly anticipated testimony began Friday morning with questions from his attorney Mark Cohen that attempted to address the heart of the government’s case against his client.
Prosecutors have alleged that Bankman-Fried deliberately stole funds that belonged to FTX customers and secretly lent the assets to his crypto trading firm Alameda Research. They produced several key witnesses over the last month who corroborated those claims.
Cohen on Friday asked his client if he defrauded anyone.
“No, I didn’t,” Bankman-Fried said.
Then Cohen asked if Bankman-Fried took customer funds.
“No,” Bankman-Fried said.
Read more here.
Ford (F) shares sank 10% on Friday after the company missed earnings expectations following a tentative agreement with the United Auto Workers union on a new labor contract.
The carmaker joined GM in pulling its full-year guidance, citing the impact of the labor shortages, while cautious commentary surrounding the future of EV investments concerned investors.
As Yahoo Finance’s Pras Subramanian reports:
For the quarter, Ford reported top-line revenue of $43.8 billion vs $41.21 billion estimated, which was nearly an 11% improvement from a year ago but a dip from the $45.0 billion reported in Q2. Ford posted adjusted earnings per share of $0.39 vs $0.47 estimated and adjusted EBIT of $2.2 billion.
In terms of guidance, Ford said through Q3 it had earned $9.4 billion in adjusted EBIT toward its full-year range of $11 billion to $12 billion it affirmed in late July.
“However, given effects of the UAW strike and with ratification of the tentative agreement with the union that was announced Wednesday night pending, Ford is withdrawing its guidance for full-year 2023 operating results,” the company said in a statement.
For its Model e EV business, Ford reported a loss of $1.33 billion. The company said the loss in the segment was attributable to investments in next-gen vehicles, but signaled problems remain with its current-gen EVs.
“Many North America customers interested in buying EVs are unwilling to pay premiums for them over gas or hybrid vehicles, sharply compressing EV prices and profitability,” the company said in a statement.
Read more here.
Stocks were mixed in midday trading on Friday as the tech-heavy Nasdaq Composite (^IXIC), which closed Thursday deep in the red, bounced back on Friday, up roughly 0.9% while the benchmark S&P 500 (^GSPC) erased earlier gains to trade mostly flat. The Dow Jones Industrial Average (^DJI) dropped roughly 0.6%, or more than 180 points.
The benchmark 10-year yield (^TNX) rose about 3 basis points to trade near 4.88% after monthly core PCE prices jumped the most in four months as spending accelerated.
JPMorgan Chase (JPM) shares fell as much as 3.2% on Friday, the highest intraday drop in more than two months, after the bank said CEO Jamie Dimon plans to sell 1 million shares of company stock currently valued at roughly $141 million. This would be Dimon’s first such sale since taking over as executive officer in 2005.
As Yahoo Finance’s David Hollerith reports:
The CEO and his family intend to do so starting in 2024, according to a regulatory filing from JPMorgan Friday that described the sale as being “for financial diversification and tax-planning purposes.”
A JPMorgan spokesman said Friday that the disclosure does not relate to any near-term succession planning. Dimon, 67 years old, is currently the longest-serving CEO of a major national bank. JPMorgan is the largest lender by assets in the US.
“Mr. Dimon continues to believe the company’s prospects are very strong and his stake in the company will remain very significant,” JPMorgan said in the filing.
The planned stock sale represents roughly 12% of the holdings belonging to the CEO and his family, excluding uninvested shares and stock appreciation rights. Dimon and his family currently own roughly 8.6 million shares of stock worth approximately $1.2 billion as of Thursday’s closing price.
Read more here.
The Federal Reserve’s preferred inflation metric showed prices continued to cool in September. But spending increased at a pace that may not be sustainable.
Personal spending jumped 0.7%, outweighing personal income, which rose 0.3% — the third consecutive month of declines.
“That is clearly unsustainable, and we expect spending growth will slow sharply in the quarters ahead,” Oxford Economics lead economist Michael Pearce wrote in reaction to the data.
“Disposable income growth has come under pressure as wage and job growth slows,” Pearce explained. “The weakness also reflects a slight fiscal tightening as transfer payments decline and as tax payments increase. With incomes falling, higher spending is being funded by lower saving, with the personal saving rate declining to 3.4% in September, its lowest since December 2022.”
“While we estimate there is still a considerable stock of excess saving left over from the pandemic, that is now mostly concentrated among higher income households and appears to be increasingly treated as wealth, so we expect the boost to spending from lower saving to wane from here. We also expect some increase in precautionary saving as the job market slows.”
Friday’s inflation data comes as the US economy grew at its fastest pace in nearly two years during the past three months, largely driven by consumers stepping up their spending despite a high interest rate environment.
The Federal Reserve will carefully consider all of these data points ahead of its next interest rate decision on Nov. 1.
Here are some of the stocks leading Yahoo Finance’s trending tickers page in morning trading on Friday:
Amazon.com, Inc. (AMZN): Shares of the tech giant surged more than 7% after the company reported earnings that beat estimates, and touted bullish commentary around artificial intelligence. CEO Andy Jassy told analysts on the earnings call that AI represents an opportunity worth “tens of billions” for Amazon’s cloud business, Amazon Web Services (AWS). Check out the full earnings breakdown here, from Yahoo Finance’s Allie Garfinkle.
Chevron Corporation (CVX), Exxon Mobil (XOM): Shares fell more than 5% and 1%, respectively, after the oil giants reported disappointing earnings for the third quarter. Both companies saw quarterly profits decline more than 40%, hampered by the oil price spikes in 2022. Chevron and Exxon also reported weak results for their oil-refining and chemical businesses.
Intel Corporation (INTC): Shares surged more than 10% after the tech giant beat analysts’ expectations on the top and bottom lines and reported better-than-expected guidance for the fourth quarter, implying revenue growth for the first time since 2020. Yahoo Finance’s Dan Howley has the breakdown.
Enphase Energy, Inc. (ENPH): Energy tech company Enphase saw shares slump about 15% in early trading after its third quarter revenue target fell short of analyst estimates due to weak demand. Oppenheimer analyst Colin Rusch downgraded the stock to Perform from Outperform following the results, citing “industry uncertainty”
With contributing reporting from Jenny McCall
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