- Nancy Wiechec/Reuters
Stocks finished lower on Tuesday, trading in a narrow range before declining into the close as Wall Street awaited earnings from JPMorgan, which kicked off what is set to be a busy week of bank earnings reports with a miss on the bottom line.
First, the scoreboard:
Dow: 17,082, -50, (-0.3%) S&P 500: 2,003, -14, (-0.7%) Nasdaq: 4,796, -42, (-0.9%)
And now, the top stories on Tuesday:
Small business optimism held firm in September, and everything we’re seeing from small business owners suggests that higher wages are coming for American workers. The NFIB’s latest report released Tuesday showed that 23% of firms reported an increase in compensation in the last three months while 16% plan to raise pay in the coming months. According to the NFIB, this is still a “historically strong” reading for this recovery. Overall, optimism came in at a reading of 96.1, up from 95.5 in August. The latest report on consumer expectations from the New York Fed showed that expected spending from households over the next year continues to decline. Median household spending is now expected to rise just 3.2% in the next year, the lowest in the survey’s history. A report in The Wall Street Journal on Tuesday highlighted a booming area for worker pay in America: truck drivers. The Journal reported that in the last two years pay for truck drivers is up 17%, well outpacing the paltry 2% per year raise seen for Americans. Twitter confirmed layoffs on Tuesday, announcing that it will cut about 8% of its global workforce, or 336 people, across the company. Twitter said these actions will see the company incur about $10-$20 million in severance costs. In a letter to employees, CEO Jack Dorsey said the company is working to produce a “streamlined roadmap” for the company. Fortress Investment Group also confirmed previously reported news, announcing that Mike Novogratz will retire at the end of the year and will received a $255.6 million payment on his way out the door. “This was a difficult decision given my confidence in both the research positions we hold and the talent of our team,” Novogratz said in a statement. “But we have had an extremely challenging two years, and I do not believe the current environment is conducive to achieving our best results.” Novogratz left Fortress as the macro hedge fund he ran was down 4.7% in September and lost 17.5% this year. In a tweet on Tuesday, Bill Gross, previously of PIMCO and now of Janus, made fun of managers like Novogratz that shut down amid a tough year. Warren Buffett, speaking at Fortune’s Most Powerful Women Summit said, as you might expect, not super nice things about hedge funds. Buffett also discussed Berkshire’s blockbuster acquisition of Precision Castparts, which he said was closed after he’d spoken with Precision CEO Mark Donegan for all of about 25 minutes. “We basically do no due diligence,” Buffett said. “Our due diligence is basically looking into their eyes.”The CBOE’s SKEW index hit an all-time high on Monday. Which on the one hand is scary. On the other hand, it means that it’s simply more expensive to protect yourself against things that are scary. In the bond world, Business Insider’s Sam Ro took a look at the junk bond market, which has had a rocky few weeks. Ro broke down spreads by sector, finding that energy, which has been under stress as the price of oil has collapsed, has seen spreads blow out the most. The high-yield space as a whole, however, paints a more subdued picture. And as Capital Economics’ Melanie Debono wrote in a note last Friday, “[W]e do not think the latest increase in credit spreads heralds another recession.”