US Stocks See Support from Favorable PPI Report, Crude Oil Price Drop

The S&P 500 Index and other major US stock market indices are experiencing support due to positive news from two key economic reports. The September PPI report showed a lower-than-expected increase in prices, causing a decline in the 10-year T-note yield by -5.2 bp to 4.641%. Additionally, the lack of new military strikes in the Persian Gulf region led to a drop in crude oil prices by more than -2%.

Despite these positive developments, US tech stocks were impacted by disappointing guidance from Cisco Systems and Cerebras Systems, with both companies' shares dropping significantly. However, some support for tech stocks came from an overnight rally in the South Korean Kospi index, driven in part by a surge in Samsung Electronics and chip-maker SK Hynix.

The outlook for strong Q2 earnings remains bullish, with the S&P 500 tracking for earnings growth of nearly 32% in Q2. This is well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence.