Stocks finished a choppy week of trading lower following a series of negative economic reports.
Friday Frights
Earnings and economic reports aside, Friday was packed with less-than-great news coming from corporations.
Plant-based meat provider Beyond Meat, Inc. (BYND) plunged more than 7% after the company issued downside third-quarter revenue guidance. Downside guidance is one thing, but Beyond forecast its lightest quarter of sales since its second quarter as a public company in 2019.
That alone would spook investors, but the company kept it October classy with a few jump scares, being; its CFO and COO leaving and that the company plans to cut its workforce by about 19%.
Meanwhile, Kroger (KR) and Albertson (ACI) fell 8.46% and 7.47% respectively as investors reacted to the merger announcement. This one scared more than just investors.
The pair would form a mega-grocer, which might help it better keep pace with the likes of Amazon and Walmart. However, investors are worried that the deal will get shot down as the plans to spin off nearly 400 stores that would create a new rival didn’t instill confidence.
This has Kroger and Albertson's stock feeling the Bern as Democratic lawmakers, watchdogs, and unions alike have heavily criticized the deal. FTC chair Lina Khan is a known critic of corporate consolidation and blocked Staple’s combination with Office Depot.
Economic Reports
There was a wave of important economic reports this week and all of them let investors down.
It all started Tuesday with the Producer Price Index, which showed higher-than-expected inflation for producers, rising 0.4% in September. The core reading met expectations for a 0.3% rise. Given that increased costs to producers tend to get passed downstream to consumers, this report set the stage for an underwhelming CPI report and suggested that the Fed would likely maintain its hawkish course.
The second letdown came from Wednesday's Consumer Price Index. This showed headline and core figures that were above estimates, with consumer prices rising 0.4% and 0.6% respectively. The report showed widespread price increases that worried investors of a higher-for-longer Fed.
Next came Retail Sales, which saw the headline figure fall flat in September while the figure excluding autos rose 0.1%. This figure isn’t adjusted for inflation, so a flat figure suggests consumers cut spending in some places.
Lastly, was the preliminary University of Michigan Consumer Sentiment report for October. This saw sentiment increase slightly more than expected, however, the report sparked a sell-off shortly after it showed that consumer inflation expectations rose for the first time in seven months. This spurred uncertainty in investors as to how strong consumer spending will be in the coming months.
Bank Earnings
Lastly, banks kicked earnings season off and it was mostly well-received.
Wells Fargo (WFC), JPMorgan Chase (JPM), and Citigroup (C) all rose Friday following their earnings reports. Meanwhile, Morgan Stanley (MS) slid as revenues dropped 55%.
Mortgage lending plummeted under the pressure of rising interest rates, with Wells Fargo seeing a near 60% reduction while JPMorgan lost more than 70%. Meanwhile, banks started aggressively planning for the worst, setting aside more money to cover future loan losses.
All told, stocks fell this week. The Dow was the sole advancer, rising 1.26%. Meanwhile, the S&P 500 dropped 1.49%, while the Nasdaq lost 3.05% and the Russell 2000 fell 0.93%.
