Traders work on the floor of the New York Stock Exchange (NYSE) during morning trading on January 11, 2024 in New York City.
Angela Weiss | AFP | Getty Images
On Friday, the S&P 500 index set a new record, heading into its fifth winning week as banking giants get off to a strong start to third-quarter earnings season.
The composite index rose 0.6%, and the Dow Jones Industrial Average rose 340 points (0.8%). The Nasdaq Composite Index rose 0.3%, even as Tesla stock fell 7% due to the weak Robotaxi event.
“What we’re seeing is an expansion of the market, which I think is pretty hard hit in a good way today,” said Craig Sterling, head of U.S. equity research at Amundi US. Ta.
Major stock averages are headed for weekly gains, with the S&P 500 up 1.1%, marking its fifth consecutive week of positive growth. The Dow rose 1% and the Nasdaq rose 1.1%.
A strong start to the third quarter earnings season boosted stock prices. JPMorgan Chase & Co. rose 4% on better-than-expected profits and sales, while Wells Fargo jumped 5% on better-than-expected profits. Investors overlooked disappointing earnings and an 11% decline in net interest income.
Stirling said the outlook suggests that a downward trend in net interest income in favor of banks may be starting to emerge after a period of high interest rates.
Beyond earnings, Wall Street weighed the latest data to help ease concerns that inflation is not cooling quickly enough. The producer price index, a measure of wholesale inflation, remained unchanged in September, falling below the Dow Jones Industrial Average’s forecast for a 0.1% rise. This eased some of the concerns raised after the consumer price index rose slightly more than expected in September.
“CPI may have looked hot, but PPI was not,” said David Russell of TradeStation. “Overall, these numbers are becoming less influential as inflation slows. The Fed could still be on track to reach its 25 basis point target over the next two meetings.”
Federal funds futures trading suggests there is about an 82% chance the Federal Reserve will cut interest rates by a quarter of a point in November, according to the CME FedWatch tool. However, central bank policymakers will closely monitor additional data to determine the direction of interest rates.
