US Close: Stocks drift ahead of CPI/Earnings, JOLTS miss, IMF lowers outlook, Fastenal’s inflation warning

US stocks are mixed as investors refrain from any major positioning ahead of the September inflation report, official start to earnings season, and the House debt limit vote. JPMorgan gets to officially kick off earnings season, but Fastenal, the industrial giant gets to be the first S&P 500 company to post results. Fastenal’s results did not deliver any surprises, primarily giving a reminder that supply chain and labor shortages remain and that inflation remains elevated.

Stocks were lower early over both global growth concerns and weakness with China’s property sector but turned positive after House Speaker Pelosi provided a potential path for getting infrastructure spending and the debt ceiling done.  Pelosi noted that Democrats lower the price tag of Biden’s economic agenda by cutting the number of years covered in the agenda.  Risks to the outlook are rising and Democrats know they are running out of time.  Progressives and moderates don’t want to be responsible for disrupting Biden’s economic agenda, so it looks like some major concessions will be made shortly. 

JOLTS

Job openings in August posted the first decline in almost a year and the number of quits rose to a record high 4.3 million.  The delta variant is clearly reflected in the headline miss of 10.439 million job openings, well below the consensus estimate of 10.954 and the upwardly revised 11.098 million prior reading.  The labor market recovery will remain tricky and that should push back expectations on when the Fed will be able to check off the substantial progress box. 

Fastenal/LVMH

The industrial products maker did not deliver any surprises.  The manufacturing sector agrees with Fastenal’s comment that “product and shipping cost inflation remains high; Supply chain disruption and labor shortages remain acute.”  Fastenal did not impress as sales for certain products related to the pandemic eased.  Fastenal will continue to increase prices in the fourth quarter.

LVMH posted slightly better-than-expected third quarter revenue and anticipates continuation of the current growth. 

IMF

The IMF’s World Economic Outlook noted that the global recovery continues, but the momentum has weakened and uncertainty has increased.  The IMF is concerned that surging prices will force central banks into tightening cycles that could trigger selloffs in global equities. An unbalance economic recovery and rising pricing pressures will complicate monetary policy efforts going forward.  

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