On Wall Street Stocks Staged Stunning Reversal

Barry Adams
13 Oct, 2022
New York City

Stocks staged a stunning reversal after benchmark indexes rebounded from the morning's 3% decline to close up more than 2%.  

Major averages dropped as much as 3% to new 2022 lows in the first thirty minutes of trading but managed to recover losses and trade in positive territory. 

Benchmark indexes rebounded after banks and energy complex stocks advanced and tech stocks reversed earlier losses.

Goldman Sachs jumped 4%, JPMorgan soared 5.5%, Apple, Visa and Microsoft increased between 3% and 3.5%. 

The S&P 500 increased 2.6% to 3,669.91 and the Nasdaq Composite index added 2.2% to 10,649.15. 

Crude oil rose $1.80 to $89.06 a barrel and natural gas increased 26 cents to $6.70 a thermal unit.  

 

Inflation Stays Elevated In September 

Consumer prices rose at a faster pace in September, reflecting deeply entrenched inflation expectations in the services driven economy. 

The Consumer Price Index increased 0.4% in September on a seasonally adjusted basis, after rising 0.1% in August, the Bureau of Labor Statistics reported today. 

Prices rose 8.2% from a year ago on a seasonally unadjusted basis, the slowest increase in seven months, compared to 8.3% in August.  

Core index, excluding food and energy, rose 0.6% in September, matching the monthly rise in the previous month. 

On an annual basis, core rate increased 6.6% from a year ago, a new four-decade high highlighting elevated inflation pressures.   

The elevated inflation provides another signal for the Fed to continue its campaign of big rate hikes. 

The Federal Reserve is widely expected to lift interest rates by 75 basis points at its next policy meeting ending on November 2. 

There is no progress on inflation despite the Federal Reserve lifting rates five times in the last seven months.   

The yield on 2-year Treasury notes inched higher to 4.47%,  10-year Treasury notes increased to 3.95% and 30-year Treasury bonds edged up to 3.94%. 

 

US Stock Movers 

Albertsons Companies Inc soared 11.9% to $28.73 after CNBC and Bloomberg suggested that the retailer is likely to strike a merger deal with Kroger as early as this week.  

Both companies did not return calls to confirm the news. 

Victoria's Secret & Company sparkled 6.2% to $34.46 after the apparel retailer guided its latest quarterly earnings is likely to be near the high end of the range. 

Third quarter operating earnings are expected to be near the high end of the range between $10 million and $40 million and diluted earnings per share between breakeven and 25 cents a share. 

The revised operating income and earnings guidance is based on the estimated net sales decline in the high single digit range, as previously stated. 

Walgreens Boots Alliance Inc burped up 5.9% to $33.82 after the pharmaceutical retailer said revenue in the fiscal fourth quarter ending in August declined to $32.4 billion from $34.3 billion a year ago. 

The retailer swung to a net loss of $415 million from $627 million and diluted earnings per share to a loss of 48 cents from 72 cents a year ago. 

Walgreens guided fiscal 2023 adjusted earnings per share between $4.45 and $4.65. 

 

Sharp Reversal In European Indexes  

European indexes closed up after a wild day that saw indexes plunging as much as 1.5%, after the release of the U.S. consumer inflation data. 

Geopolitical tensions stayed high after Russia intensified its bombing campaign in Ukraine. 

The market decline was sharp and brief after energy and resource stocks led the rebound in the region following the rise in New York. 

The UK bond market turmoil continued after reports suggested that the government is likely to reverse most of the tax proposals. 

The expectations of tax reversal supported a rally in the UK gilt market and also lifted the British pound for the second day in a row. 

 

German Inflation Jumped to 10%

Consumer price inflation accelerated to 10.0% in September from 7.9% in August, according to final data reported by Destatis on Thursday. 

Excluding food and energy prices, inflation increased to 4.6%. 

Energy prices surged 43.9% and food prices rose 18.7% from a year ago and the ending of 9-euro tickets and a fuel discount fueled the price surge in September. 

Goods prices jumped 17.2% and services prices gained 3.6% in the month.   

 

Volatile Markets Closed Higher 

The DAX index increased 1.5% to 12,355.58, the CAC-40 index added 1.04% to 5,879.19 and the FTSE 100 index advanced 0.4% to 6,850.27. 

The Swiss benchmark SMI added 0.3% or 28.58 to 10,227.92 after volatile trading. 

The euro edged up 0.8% to 97.78 U.S. cents and the pound jumped 2.2% to $1.135. 

 

Europe Stock Movers

Oxford Instruments Plc gained 7.7% to 1,854.0 pence after the high-tech company sounded optimistic about first-half results. 

Banks in Switzerland closed up following the surge in the sector across Europe ahead of earnings. 

Credit Suisse jumped 6.5% and UBS Group increased 3.5%. 

Suedzucker AG closed down 2.7% to