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“Age needs the company of youth” – Eleanor Roosevelt

Morning stock market summary

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Welcome to earnings season!  The unofficial start to earnings season kicked off this morning, and the overall tone has been positive. Of the five companies reporting, all five exceeded EPS forecasts, and only Wells Fargo (WFC) came up short in revenues. In response to the reports, all five stocks are up in the pre-market with gains ranging from 1.2% for JPMorgan (JPM) to a 5.3% rally for Fastenal (FAST). If first impressions meant anything, this would be a good thing!

The only economic reports on the calendar today are PPI and Michigan Sentiment. Yesterday’s higher-than-expected CPI pushed rates higher and raised concerns of a slower pace of rate cuts, so today’s weaker-than-expected headline number helped to offset the negative sentiment. Headline PPI came in weaker than expected at 0.0% versus expectations for a gain of 0.1%.  Core PPI was in line with estimates at 0.2%. On a y/y basis, both readings were 0.2 ppts higher than forecasts at 1.8% for the headline reading and 2.8% on a core basis. A few Fed speakers are also on the calendar today with Goolsbee at 9:45, Logan at 10:45, and Bowman just after 1 PM.

Since tomorrow is Saturday, the market will not be open to celebrate the second anniversary of the bull market but looking at the S&P 500’s performance over the last two years, the gain of slightly more than 60% ranks as the best two-year gain since the two years ending in April 2022 when we were in the early months of the bear market. While the two-year rolling rate of change only briefly dipped into negative territory, it has come roaring back in the last year, and at current levels, the performance ranks in the 95th percentile of all periods since 1954.

The stock market will be open on Monday, but for some of you, it will be a holiday in observance of Columbus Day.  The chart below shows the S&P 500’s performance on Columbus Day since it was officially designated as the second Monday of October 1971. During this period, the S&P 500’s median performance has been a gain of 0.16% with positive returns 60% of the time.  The best Columbus Day was in 2008 when the S&P 500 rallied 11.6%, and the 3.4% gain in 2011 wasn’t too shabby either. The weakest Columbus Day occurred in 2014 (-1.6%), and in the nine years since then, the S&P 500’s median performance has been a decline of 0.04% with declines in five out of nine years.