Stocks opened higher Friday as investors took in the latest inflation update and the first round of fourth-quarter earnings. The enthusiasm faded into the long weekend, though, with the main indexes ending far from where they started.
Ahead of the open, data from the Bureau of Labor Statistics showed the December Producer Price Index (PPI), which measures what businesses are paying suppliers for goods, was down 0.1% on a month-to-month basis, and up 1.0% on an annual basis. The monthly figure matched what was seen in November, while the yearly number was greater than the 0.8% rise from the previous month.
Core PPI, which excludes volatile food and energy prices, was unchanged vs November's 0.1% increase. Year-over-year, core PPI was up 2.5%, above what was seen the month prior.
"The PPI data has repaired the damage done by yesterday's Consumer Price Index (CPI) data which came in a little higher than expected," says Craig Erlam, senior market analyst at OANDA. "But it's clear from today's readings that disinflationary pressures remain in the pipeline, which should give the Fed confidence over the coming months that inflation is heading back to target."
Delta Air Lines spirals on lower profit outlook
The start of fourth-quarter earnings season was also in focus Friday. JPMorgan Chase (JPM, -0.7%) and Bank of America (BAC, 1.1%) stocks each closed lower despite the big banks reporting bottom-line beats.
Delta Air Lines (DAL), meanwhile, nosedived 9.0% after the air carrier's Q4 results. For the three-month period, Delta reported higher-than-expected earnings of $1.28 per share on $13.7 billion in revenue. It also forecast first-quarter earnings that are inline with analysts' expectations. Sparking today's selloff, though, was DAL's guidance for full-year earnings per share of $7, which is lower than what it projected at its June Investor Day.
Analysts likely aren't too concerned about today's decline. Delta remains in the minority as one of Wall Street's Strong Buy stocks, with analysts highly bullish on the air carrier. Of the 21 analysts covering DAL tracked by S&P Global Market Intelligence, 15 say it's a Strong Buy, five call it a Buy and one has it at Hold. And the average price target of $53.40 represents implied upside of nearly 40% to current levels.
UnitedHealth drags on Dow
Elsewhere, UnitedHealth Group (UNH) was one of the worst blue chip stocks today, slumping 3.4%. The health insurance giant reported fourth-quarter earnings of $6.16 per share on $94.4 billion in revenue, more than analysts were expecting.
However, the company's medical cost ratio (MCR), which measures medical costs as a percentage of premium revenue, came in above estimates. A higher MCR means a company is paying more from premiums to cover the cost of claims. For all of 2024, UNH is guiding for an MCR of 84%, "reflecting higher medical utilization and ongoing headwinds from a Medicare rate change," says CFRA Research analyst Daniel Rich (Hold).
At $521 per share, UNH has the biggest impact on the price-weighted Dow Jones Industrial Average. As a result, the 30-stock index lagged today, shedding 0.3% to 37,592. The Nasdaq Composite (+0.02% at 14,972) and the S&P 500 (+0.08% at 4,783) ended with marginal gains.
As a reminder, Monday is a stock market holiday with both the equities and bond markets closed for Martin Luther King Jr. Day.
