Stocks Ignore Inflation, Oil, Gas Prices, and Discouraging Earnings Reports from Financials as Midterms Loom

Stocks shook off the inflation news from the past two days of September CPI and PPI readings above expectations. By most standards, those inflation numbers were about the worst news Wall Street could have received. On a scale of 1-10, both figures came in at about 8 or 9. What’s worse, is that most savvy Wall Street investors understand just how understated the inflation metrics really are.

Given that information, however, stocks, after a slow start, rallied for the duration of the session, turning red to green and also ignoring the rising prices of oil and gasoline. Maybe the masters of the universe who ply markets with seemingly unlimited amounts of money know something nobody else does. An alternate argument can be made that these ongoing distortions in market dynamics are all tied to politics, specifically, the midterm elections on November 3rd.

So, the end of the week arrives with the major indices split, the Dow and S&P positive, but the NASDAQ down 653 points. Investors are poring over the last of the week's earnings reports.

After Thursday's close, these companies reported:
Alcoa (AA) - EPS beat, revenue miss, shares higher by 4% pre-market
Simmons Bank (SFNC) - EPS beat, revenue miss, shares flat
Interactive Brokers (IBKR) - EPS miss, revenue beat, shares off one percent
J.B. Hunt (JBHT) - EPS beat, revenue beat, shares down 3%

On Friday, before the open:
M&T Bank (MTB) - EPS beat, revenue in line, shares off one percent
Truist Financial (TFC) - EPS miss, stock down 1-2%
Citizens Financial Group (CFG) - EPS beat, shares down 2%
Regions Financial (RF) - EPS beat, revenue miss, shares up 1-2%
Travelers (TRV) - EPS, revenue beats, shares down 4.5%

The recurring theme for mainly bank stocks this quarter has been winning on EPS, but coming up short on revenue. Apparently, banks of all sizes are making more money on higher interest rates, but, with lower revenue. Spreads on interest-sensitive loans are good for business, but they aren't writing new loans, which would make sense, given higher mortgage and small business loan rates.

The larger banks that reported earlier in the week have also shown weakness. Over the past month, led by Bank of America's 10.71% decline, JP Morgan (-3.84%), Goldman Sachs (-4.98%), Wells Fargo (-4.94%) and Citigroup (-7.33%) are all down, indicating stress in the banking system. What's spurring the selling, besides nose-bleed prices, are fears of a breakdown in AI-related and commercial real estate loans, both of which have been nder pressure, along with the nagging low revenue story. If banks aren't making loans, the economy isn't moving and a recession may be close at hand.

The case for the one Dow component reporting Friday, Travelers (TRV), is unusual in that the stock is sitting near all-time highs, and posted strong results outside of what they call "catastrophe losses", which increased 34% in the quarter just ended. That seems to be just a part of the story. Profit-taking on a stock that is up 32% year-to-date completes the picture.

With the opening bell a half hour ahead, futures are mixed, with the Dow and S&P up and the NASDAQ lower, but only by 40 points or so.

Gold and silver continue to recover as bond yields have slipped lower the past few days. Gold is holding small gains this morning around $4,178, and silver is bouncing in a range between $57.25 and $57.75.

The market remains difficult to decipher and trading volume has been down. It appears to be in a wait-and-see condition until the midterms, which runs counter to the usual activity during earnings seasons. Trading may pick up over the next two weeks, as they are the busiest on the calendar for reporting.

At the Close, Thursday, October 15, 2026:
Dow: 52,177.69, +556.21 (+1.08%)
NASDAQ: 26,713.03, +20.16 (+0.08%)
S&P 500: 7,744.06, +25.12 (+0.33%)
NYSE Composite: 24,066.65, +201.22 (+0.84%)