Source: Charles Schwab, data from 10/12 – 10/16

Weekly Market Minute

🧭 This Week In the Markets

Image Source: Michael Nagle | Bloomberg

Major U.S. Banks Kick Off Third-Quarter Earnings Season

Several of the nation’s largest banks kicked off third-quarter earnings season this week with mixed results. Goldman Sachs exceeded expectations, reporting $18.68 billion in revenue, driven by a 72% increase in equities trading revenue and a 21% rise in investment banking fees. Citigroup also surpassed earnings and revenue estimates, posting its strongest third-quarter revenue in a decade. Meanwhile, JPMorgan Chase fell short of expectations as weaker fixed-income trading and rising expenses weighed on results, while Wells Fargo exceeded earnings estimates but missed revenue forecasts. Despite elevated interest rates, persistent inflation, and higher energy costs, bank executives indicated that consumer spending and credit conditions remain resilient, although they cautioned about potential risks associated with the rapid expansion of artificial intelligence infrastructure.

Social Security Benefits to Increase 3.6% in 2027

The Social Security Administration announced Wednesday that benefits will increase by 3.6% in 2027, marking the largest cost-of-living adjustment (COLA) since 2023 and up from 2.8% in 2026. The increase will provide retirees with an additional $75 per month on average, with approximately 72 million Social Security recipients seeing higher payments beginning in January. The adjustment comes amid persistent inflation, with consumer prices rising 3.7% over the past year.

While the increase is intended to help retirees keep pace with rising living costs, higher Medicare premiums could partially offset the additional benefits. Medicare Part B premiums are projected to rise from $202.90 per month in 2026 to $209.50 in 2027. Beneficiaries will receive notices detailing their updated benefit amounts and applicable deductions, with information available through their online Social Security accounts beginning in late November.

Inflation Accelerates as Consumer and Wholesale Prices Rise

Consumer prices rose more than expected in September, with the Consumer Price Index (CPI) increasing 0.6% for the month and 3.7% from a year earlier, up from 3.4% in August. Rising energy costs were the primary driver, as gasoline prices increased 9.1% during the month and accounted for approximately half of the overall increase. Core CPI, which excludes volatile food and energy prices, rose 0.3% for the month and 2.6% annually, also exceeding economists’ expectations. Price increases extended beyond energy, with shelter, used vehicles, and apparel all contributing to inflationary pressures.

Wholesale inflation also accelerated in September, with the Producer Price Index (PPI) rising 1.3% for the month and 6.3% annually, marking the largest increases since 2022. Both figures exceeded economists’ expectations of 0.6% and 5.5%, respectively. Energy costs were again a major contributor, while core PPI, which excludes food and energy, increased 0.7% for the month and 5.0% annually. The stronger-than-expected inflation reports suggest that higher energy costs may be contributing to broader price pressures, while also adding uncertainty to the Federal Reserve’s interest rate outlook.

🏢 Corporate Earnings

• Taiwan Semiconductor Manufacturing (TSM) narrowly exceeded quarterly revenue expectations, reporting approximately $46.36 billion in revenue. These results were driven by continued strong global demand for AI chips, as the company recorded its sixth consecutive quarter of record net profit.
• JPMorgan Chase (JPM) fell below expectations, reporting earnings per share of $5.57 on revenue of $50.91 billion, compared with estimates of $5.90 per share and $51.22 billion. These results reflect weaker fixed income trading and rising expenses.
• Johnson & Johnson (JNJ) slightly exceeded quarterly earnings expectations, reporting adjusted earnings of $2.59 per share on revenue of $25.4 billion, compared with estimates of $2.54 per share and $25.28 billion in revenue. The stronger-than-expected results were driven by robust pharmaceutical sales, particularly growth in its immune disease treatment, Tremfya.
• Goldman Sachs (GS) beat expectations, reporting earnings per share of $17.01 on revenue of $18.68 billion, compared with estimates of $13.02 per share and $16.71 billion. These results were driven by a strong quarter for equities trading and help from the investment banking and asset and wealth management divisions.
• ASML (ASML) reported net sales slightly below expectations, generating net sales of €11.66 billion compared with estimates of €11.72 billion. However, net profit exceeded expectations, reaching €4.96 billion compared with estimates of €4.1 billion, supported by continued demand for advanced semiconductor manufacturing equipment driven by AI investment.
• UnitedHealth Group (UNH) surpassed third-quarter earnings expectations, reporting adjusted earnings per share of $4.69 on revenue of $112.69 billion, compared with estimates of $4.14 per share and $111.40 billion. These results come as the nation’s largest private insurer works to stabilize its margins.

📊 Sector Performance

5-day closing price ($) and change (%)

Source: Select Sector SPDRs, data based on the Sector SPDR ETFs as of 10/16

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Source: Charles Schwab

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Sources: CNBC, CNBC, CNBC, CNBC
Corporate Earnings: Taiwan Semiconductor Manufacturing, JPMorgan Chase, Johnson & Johnson, Goldman Sachs, ASML, UnitedHealth Group

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