Markets struggle to return to (almost) break-even – July 14, 2022

Stock indices battled bravely from a deep low this morning before the opening bell…to reach a modestly mixed close. Such is the trade in 2022 so far: the Dow Jones slipped another -142 points on the day, -0.42%, while the Nasdaq gained slightly, +0.03%, and the S&P 500 rose. reached -0.30%. But given that the Dow sank over -600 points at the start of this session, we’ll still consider it a near win.

The reason for the further declines in market valuations was related to a Producer Price Index (PPI) at +11.3% year-on-year – off cycle highs but still treacherously high – peaking at Initial jobless claims which reached their highest level in 8 months. And if these select examples of potential stagflation aren’t enough, we’re also seeing more and more analysts and pundits seriously considering a 1% interest rate hike from the Fed in a few weeks.

We also saw profit losses from major Wall Street banks J. P. Morgan (JPM Free report) and Morgan Stanley (MRS Free report) ahead of today’s open, kicking off a less than auspicious second quarter earnings season – and with many more financial reports tomorrow morning, including Town (VS Free report) , Wells Fargo (WFC Free report) , black rock (noir Free report) , American Bank (USB Free report) and Bank of New York – Mellon (BK Free report) . If they all go the way of JPM and MS, we could be in for a long, dismal earnings season.

On the other hand, we also saw a strong beat in the second quarter of Taiwan semiconductor (TSM Free report) this morning, with its best quarterly earnings performance in two years and a Q3 earnings guide that puts the Zacks consensus at the bottom of its range. And if the chipmaker space can string together strong numbers like these — especially given how the whole tech space has been hammered year to date — maybe we’ll be. we will be able to offset any weakness we are likely to see in the finances.

Friday brings us our biggest day of the week in terms of economic data printing and Q2 earnings. That probably won’t prove as significant as Wednesday morning’s consumer price index (CPI) headline of +9.1% year-on-year inflation — the highest in 41 years — but the total data points will provide plenty to take away from next week. and beyond. With a bit of luck (which has been rare these days), we might finally find reasons to buy up solid companies at deeply discounted valuations.

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