(Bloomberg) — Major banks, which started the season with strong results, have rebounded and their stock prices have hit record highs.
Most Read Articles on Bloomberg
The S&P 500 index topped 5,800, climbing toward a record 45th time in 2024. The benchmark’s rise was the fifth consecutive week, the longest on record since May. The KBW Bank Index hit its highest level since April 2022. JPMorgan Chase & Co. rose 5% after posting a surprise increase in net interest income and raising forecasts for its key revenue stream. Wells Fargo’s profit beat expectations and rose 6%.
“We expect a strong earnings season, including at the big banks,” said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management. “Credit card delinquency rates remain very low and increased economic activity should boost banks’ profits.”
Traders also scrutinized economic indicators. A measure of prices paid to U.S. producers remained unchanged in September, suggesting further progress toward curbing inflation. Consumer sentiment unexpectedly fell for the first time in three months as deep-seated dissatisfaction with high living costs offset optimism about the job market.
The S&P 500 rose 0.4%. The Nasdaq 100 is almost unchanged. The Dow Jones Industrial Average rose 0.7%. Tesla fell 8% after its long-awaited self-driving taxi announcement did not reveal details. Uber Technologies and Lyft rose at least 9.1%.
The yield on the 10-year U.S. Treasury rose 1 basis point to 4.07%. The Bloomberg Dollar Spot Index was little changed. West Texas Intermediate crude oil fell 0.8% to $75.28 a barrel.
“Now that the Fed has started its rate cutting cycle, lower interest rates on things like credit card debt and business loans should provide an additional boost to the economy,” said David Lefkowitz of UBS Global Wealth Management. “As a result, we expect our third quarter earnings results to be consistent with recent healthy trends.”
Lefkowitz said that in a non-recession scenario, the S&P 500 would rise an average of 17% in the 12 months after the Fed begins cutting interest rates. He reiterated his S&P 500 price targets for December 2024 and June 2025 at 5,900 and 6,200.
Apollo’s Torsten Slok said the financial industry has been a top performer during Federal Reserve rate cutting cycles that end in “soft landings.”
story continues
He looked at the total returns for each sector during two rate-cutting cycles that did not coincide with recessions: July 1995-January 1996 and September-November 1998.
An unusually large dichotomy has taken shape as we head into third-quarter earnings season, according to Bloomberg Intelligence’s Gina Martin Adams, Michael Casper and Wendy Soong. Analysts noted that while they continue to lower standards for S&P 500 companies, management’s guidance suggests a significantly stronger outlook and suggests companies should easily beat expectations.
Third-quarter S&P 500 net income growth is now expected to rise just 4.2%, down from the more than 7% growth expected in mid-July, largely thanks to the energy sector. has been done. But analysts’ worsening outlook was not limited to energy, they noted, with forecasts falling for all sectors except communications services.
According to BI, 37% of S&P 500 companies are now expected to report lower year-over-year earnings per share this quarter, compared to 26.6% in the previous quarter.
Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Inc., along with smaller companies in the region, are likely to point to increased earnings pressure in their earnings reports next week as they begin to consider Fed rate cuts.
Net interest income (the difference between what banks earn on loans and what they pay on deposits) will move away from last year’s peak with the prospect of further interest rate cuts, but there may be surprises. .
Company highlights:
BlackRock Inc. is the world’s largest wealth manager, which attracted a record $221 billion in customer cash last quarter and aims to become a one-stop shop for stocks, bonds and a growing number of products. It pushed the company’s assets to a record $11.5 trillion. , private property.
Bank of New York Mellon’s third-quarter profit beat expectations as fee income rose 5% on rising asset values.
As a paralyzing worker strike stretches into its fourth full week, Boeing gets tougher on union representatives by filing unfair labor practice charges, accusing the other party of negotiating in bad faith and undermining its own agreement. Taking a stance.
Humana Inc. releases its final quality ratings for private Medicare Advantage health plans.
BP expects net debt to increase in the third quarter due to lower refining margins and changes in the timing of asset sales.
The main movements in the market are:
stock
As of 1:08 p.m. New York time, the S&P 500 was up 0.4%.
Nasdaq 100 almost unchanged
The Dow Jones Industrial Average rose 0.7%.
MSCI World Index rose 0.5%
currency
Bloomberg Dollar Spot Index little changed
The euro was almost unchanged at $1.0944.
The British pound was almost unchanged at $1.3069.
The Japanese yen fell 0.3% to 149.04 yen to the dollar.
cryptocurrency
Bitcoin rises 4.2% to $62,247.53
Ether rises 3% to $2,437.38
bond
The 10-year Treasury yield rose 1 basis point to 4.07%.
German 10-year bond yield remains unchanged at 2.27%
UK 10-year bond yield remains unchanged at 4.21%
merchandise
West Texas Intermediate crude oil fell 0.8% to $75.28 a barrel.
Spot gold rose 1.1% to $2,659.49 an ounce.
This article was produced in partnership with Bloomberg Automation.
Most Read Articles on Bloomberg Businessweek
©2024 Bloomberg LP
