Markets Strengthen Ahead of Friday CPI Report

U.S. equities closed higher across major indexes, while September Existing Home Sales met expectations at 4.06 million units, marking a seven-month high. Post-market earnings revealed mixed results: Intel missed EPS but beat revenue, seeing a 5.5% share increase; Ford significantly surpassed both top and bottom-line estimates; Newmont Mining beat EPS but projected higher Q4 expenses, leading to a 2.3% share decline; and Deckers Outdoor exceeded Q2 estimates but issued disappointing Q3 guidance, causing a 10% share drop. Looking ahead, investors await Friday's September CPI report, which is forecast to show inflation rising to 3.1% year-over-year, a level not seen since May 2024, potentially impacting future Federal Reserve interest rate policy.

Analysis

U.S. equity markets closed higher on Thursday, with the Dow gaining +0.31%, S&P 500 +0.58%, Nasdaq +0.89%, and Russell 2000 +1.22%. September Existing Home Sales met expectations at 4.06 million units, marking a seven-month high, with single-family sales up +1.7% and supply at 4.6 months. The report indicated an in-line performance amidst slightly moderated mortgage rates.

Post-market earnings presented a mixed picture for key companies. Intel (INTC) missed EPS at -$0.23 but beat revenue expectations with $13.7 billion, leading to a +5.5% share gain. Ford (F) significantly surpassed both top and bottom-line estimates with $0.45 EPS and record revenues of $50.5 billion.

Conversely, Newmont Mining (NEM) beat EPS at $1.71 but saw shares decline -2.3% due to guidance for higher Q4 expenses. Deckers Outdoor (DECK) also exceeded Q2 estimates but suffered a -10% share drop after disappointing top-line guidance.

Looking ahead, the upcoming September CPI report is critical, with inflation projected to rise to +3.1% year-over-year, the highest since May 2024. This potential acceleration in inflation could prompt the Federal Reserve to reconsider planned interest rate cuts, impacting future monetary policy.

Key Decisions for Investors

• Investors should scrutinize corporate guidance closely, as seen with NEM and DECK, where strong beats were overshadowed by cautious outlooks leading to significant share price reactions.
• Monitor Friday's CPI data for September, as a rise to 3.1% could signal persistent inflation, potentially delaying anticipated Federal Reserve interest rate cuts and increasing market volatility.
• Evaluate individual company performance within sectors, noting that while the broader market saw gains, specific earnings reports like Ford's record revenue indicate strong idiosyncratic opportunities.