Stock Market Today: Stocks End Mixed After Bleak Bank Earnings, Inflation Data

Both JPMorgan Chase and Morgan Stanley saw sharp declines in profit in Q2.

JPMorgan Chase office in London
(Image credit: Getty Images)

Stocks' volatility continued Thursday, sparked by a weak start to second-quarter earnings season and another sizzling inflation update.

On the earnings front, JPMorgan Chase (JPM (opens in new tab), -3.5%) this morning said profit in the second quarter was down 28% from the year-ago period, while revenue rose a modest 1%. The financial firm also said it is suspending stock buybacks in order to boost its capital reserves. Fellow big bank Morgan Stanley (MS (opens in new tab), -0.4%) also saw its profit sink – down 29% year-over-year – while revenue plunged 11%.

Also in focus today was the latest reading of the producer price index (PPI), which confirmed what Wednesday's scorching consumer price index (CPI) report already told us: Peak inflation was not reached last month. Data from the Labor Department showed that the PPI, which measures how much suppliers are charging businesses and their customers for their goods, surged 11.3% year-over-year in June, its seventh straight month of double-digit annual percentage gains. On a sequential basis, wholesale prices were 1.1% higher.

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One positive from the report was that the core PPI, which excludes the volatile energy and food sectors, was up 0.3% over the prior month – or down slightly from May's 0.4% increase.

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"It’s clear that food and energy are driving PPI higher, as was the case in yesterday's inflation print," says Peter Essele, head of portfolio management for Commonwealth Financial Management. "When removing these volatile components, PPI appears to have peaked and is starting to roll over, a tell-tale sign that the economy is shifting into late-cycle territory. The probability of a 100-basis-point hike from the Fed in late July has greatly increased after the two price index releases."

The one-two punch had stocks wallowing deep in negative territory for most of the morning, but the major benchmarks climbed well off their session lows by the close. The S&P 500 Index (-0.3% at 3,790) and Dow Jones Industrial Average (-0.5% at 30,630) still suffered their fifth straight loss, however, while the Nasdaq Composite ended marginally higher at 11,251.

stock price chart 071422

(Image credit: YCharts)

Other news in the stock market today:

  • The small-cap Russell 2000 slumped 1.1% to 1,707.
  • U.S. crude futures shed 0.5% to finish at $95.78 per barrel.
  • Gold futures slumped 1.7% to $1,705.80 an ounce, their lowest settlement since March 30, 2021.
  • Bitcoin climbed 4.9% to $20,603.56. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
  • Conagra Brands (CAG (opens in new tab)) fell 7.3% after the packaged food maker reported fiscal fourth-quarter revenue of $2.91 billion, below analysts' consensus estimate for revenue of $2.93 billion. However, CAG's adjusted earnings of 65 cents per share beat the average estimate by 2 cents. The company also said it plans to raise prices in the second quarter of fiscal 2023 in order to offset higher costs related to inflation. CFRA Research analyst Arun Sundaram maintained a Buy rating on the consumer staples stock after earnings. "We expect margins to improve in FY 23 with more pricing flowing through and cost inflation likely approaching its peak," the analyst says. "Also, cost savings should be easier to realize in FY 23 as the overall supply chain stabilizes. Together, we see more upside than downside to CAG's FY 23 bottom-line targets as the fiscal year progresses."
  • Energy stocks suffered notable losses as crude futures continued to slide. APA (APA (opens in new tab), -4.0%), Diamondback Energy (FANG (opens in new tab), -3.5%) and EOG Resources (EOG (opens in new tab), -3.6%) were just a few of the day's biggest decliners.

Market volatility is likely to continue for the time being, which creates an especially uncertain environment for investors. "Inflation has taken a bite out of stock and bond markets – and the bite may not be over quite yet," says Liz Young, head of investment strategy at SoFi. "Before the end of the month, we could get negative earnings guidance, a 75-100 basis point hike from the Fed, and a negative Q2 GDP print. This scenario could prove to be bad news for markets, but good news for buyers."

Although Young suggests investors "don't swing for the fences," she does believe that "we have to start swinging the bat before summer is over." And there's certainly plenty good of pitches to hit for investors of all stripes.

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Karee Venema
Contributing Editor, Kiplinger.com

With over a decade of experience writing about the stock market, Karee Venema is an investing editor and options expert at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at Schaeffer's Investment Research. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.