People walk outside of the New York Stock Exchange (NYSE) on September 05, 2023 in New York City.
Spencer Platt | Getty Images News | Getty Images
This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Consumer prices rose more than expected
The U.S. consumer price index, a closely followed inflation gauge, increased 0.4% on the month in September and 3.7% from a year ago. That’s more than the expected 0.3% and 3.6% rise, respectively. Core CPI, which excludes volatile food and energy prices, increased 0.3% on the month and 4.1% on a 12-month basis, both in line with expectations.
U.S. markets end lower, Europe stays afloat
The three main U.S. stocks gauges fell Thursday, pressured by rising Treasury yields as data showing persistent U.S. inflation sparked worries of interest rates remaining higher for longer. European stock markets closed higher, with the Stoxx 600 index up 0.1%.
Bank earnings kick off
American banks are closing out another quarter in which interest rates surged, reviving concerns about shrinking margins and rising loan losses — though some analysts see a silver lining to the industry’s woes. Earnings season kicks off Friday with reports from JPMorgan Chase, Citigroup and Wells Fargo.
Google is opening a cafe
Google is opening a sliver of its main campus to the general public starting this week. The company opened its doors to what it’s calling its “Visitor Experience” center to the public Thursday, following a ceremony where Google executives and local leaders gathered at its headquarters in Mountain View, California.
[PRO] Wall Street’s favorite bank stocks
Investors aren’t holding their breaths as banks kick off the third-quarter earnings season in earnest Friday. However, analysts expect some names in the space to shine. The new CNBC Pro stock screener tool searched for stocks that could emerge as the winners this quarter.
The bottom line
Data from the Labor Department showed September consumer price index rising 0.4% month-on-month and 3.7% from a year ago, above respective forecasts for 0.3% and 3.6%. They were mainly driven by higher rents. This pushed U.S. markets lower, renewing fears of what lies next for the Federal Reserve, which has stuck to its goal of 2% inflation.
In theory, it doesn’t look difficult to achieve, but in practice it could be harder. “You need a recession,” said Steven Blitz, chief U.S. economist at GlobalData TS Lombard. “You’re not going to magically get down to 2%.”
But the next catalyst for markets will obviously be the third quarter earnings season, with banks including JPMorgan Chase, Citigroup and Wells Fargo slated to report quarterly results later in the day. Bank stocks have been intertwined closely with the path of borrowing costs this year.
Just as they did during the March regional banking crisis, higher rates are expected to lead to a jump in losses on banks’ bond portfolios and contribute to funding pressures as institutions are forced to pay higher rates for deposits.
Investors may now want to take a deep breath to brace themselves before the barrage of earnings reports take markets by storm. And who could forget about another Federal Reserve meeting by the end of the month?