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By Nicholas
Jasinski| Wednesday, April 13TKTK Takeoff. Stocks enjoyed a broad
rally today as earnings season got going, with indexes closing solidly higher
and 10 of 11 S&P 500 sectors finishing
in the green. The index added 1.1%, as the Nasdaq Composite
jumped 2.0% and the Dow Jones Industrial Average
rose 1.0%. The latest inflation data showed another
month of superlative price increases, this time for companies and
manufacturers. The producer price index rose
1.4% in March, for a whopping 11.2% year-over-year gain. That was a larger
increase than expected and the largest in the history of the data series. The mammoth increase is relevant for
consumers, as companies will want to pass along their higher costs—adding
fuel to other inflation measures down the road. Barron's Sabrina
Escobar has all the gory details from today's PPI release here. It was a good day for airlines and other
travel stocks, following Delta Air Lines' first-quarter
results this morning. The airline reported more revenue than expected, a
smaller loss, and gave an upbeat forecast for the coming months. Delta returned to profitability for the
month of March, and revenue in the month was higher than in the same period
of 2019—the first time that has happened since the pandemic began. "The company said that consumer demand
accelerated through the first three months of the year, highlighted by strong
performance in the spring break period," wrote
Barron's Jack Denton.
"In addition, offices reopened and restrictions were lifted as the
latest surge in Covid-19 cases faded, which boosted demand from business
travelers and led to a stronger fare environment." Delta's guidance is for its available seat
capacity to reach 84% of 2019 levels in the current quarter, and for revenue
to rebound to 93% to 97% of its prepandemic level. That means fares are up
and could continue rising, Bill Alpert wrote
today. The air travel recovery is finally here, it would appear. Delta stock jumped 6.2% today, as the U.S.
Global Jets exchange-traded fund rose 5.3%. Jack has more on Delta's
latest results and outlook here.
United Airlines and American
Airlines report next week. JPMorgan
Chase was another earnings highlight today, with
the U.S.'s largest bank reporting weaker-than-expected first-quarter
profits and CEO Jamie Dimon warning investors
to expect plenty of market volatility in the months to come. Carleton
English covered
the results. Net income was down 42% year over year, to
$8.3 billion, as corporate and investment bank profits declined and
the Russia-Ukraine war rocked markets. That outweighed decent loan
growth, expanding net interest margins, and the announcement of a $30 billion
buyback authorization. JPMorgan attributed $524 million in
losses to the impact of the conflict and the market volatility it has caused.
For example, the bank had a $120 million loss as a result of extreme moves in
the price of nickel in March. JPMorgan also set aside $902 million to
cover potential loan losses in the first quarter, which subtracted from
earnings. That's because, despite a strong U.S. economy and low unemployment,
there is more trouble to come. Dimon said today: “We remain optimistic on
the economy, at least for the short term—consumer and business balance sheets
as well as consumer spending remain at healthy levels—but see significant
geopolitical and economic challenges ahead due to high inflation,
supply-chain issues, and the war in Ukraine.” JPMorgan stock finished the day down 3.2%. The next batch of big bank earnings lands
tomorrow morning: Citigroup, Goldman
Sachs, Morgan Stanley, and Wells
Fargo all report. More on that below. |
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DJIA: +1.01% to 34,564.59 The Hot Stock: American
Airlines Group +10.6% Best Sector: Consumer
Discretionary +2.5% |
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