Wall Street’s main indexes are rising as slightly hotter-than-expected producer price numbers did little to change bets around a US Federal Reserve interest-rate cut in September, while investors also parsed a mixed bag of big bank results.
JPMorgan Chase’s second-quarter profit increased on a boost from rising investment banking fees and an $US8 billion ($A12 billion) accounting gain from a share exchange deal with Visa. However, shares of the world’s largest bank fell 1.9 per cent.
Wells Fargo slid 6.9 per cent as the lender missed estimates for quarterly interest income, while Citigroup fell 2.8 per cent even after it posted a surge in investment banking revenue and gains in its services division.
The S&P 500 Financials Index shed 0.2 per cent, while the banks index lost 2.2 per cent, on track for its biggest single-day slump in nearly two months.
It was previously expected that some of the largest US banks would report weaker second-quarter profits due to lower interest payments and higher provisions for deteriorating loans.
As the S&P 500 and the Nasdaq scale fresh peaks, investors are hoping for strong profit growth from companies beyond tech heavyweights such as Nvidia, so that the US stocks rally can broaden out. “Big bank earnings, big tech earnings and consumer company earnings will be the most important to watch, as these companies are highly levered to the strength of the economy,” said Clark Bellin, president and chief investment officer, Bellwether Wealth.
Analysts expect second-quarter earnings for S&P 500 firms to grow by 9.6 per cent, from a decline of 2.8 per cent in the same period in 2023, according to LSEG IBES data. Financial firms are likely to post a profit growth of 7.3 per cent.
After data released on Thursday showed a surprise fall in US consumer prices, producer prices increased moderately in June, confirming the inflation downtrend.
“The Fed’s really focused more on the CPI and PCE because even if producer prices are increasing, there’s no guarantee that those price increases are going to be passed on to consumers,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Traders see a 96 per cent chance of a September rate cut, up from 77.7 per cent a week ago, according to CME Group’s FedWatch.
In a mixed session for megacap stocks, Apple rose 1.5 per cent, while Meta Platforms shed two per cent.
In early trading on Friday, the Dow Jones Industrial Average was up 81.85 points, or 0.21 per cent, at 39,835.60, the S&P 500 was up 25.29 points, or 0.45 per cent, at 5,609.83, and the Nasdaq Composite was up 125.94 points, or 0.69 per cent, at 18,409.35.
The S&P 500 and the Nasdaq logged their worst sessions in more than two months on Thursday, on a rotation out of high-flying large-cap stocks in favour of small-cap shares, which have lagged this year. This also set the blue-chip Dow on track for its best week in four.
BNY climbed 4.1 per cent after the US bank posted a 10 per cent rise in second-quarter net profit.
Advancing issues outnumbered decliners by a 3.68-to-1 ratio on the NYSE, and by a 3.30-to-1 ratio on the Nasdaq.
The S&P index recorded 33 new 52-week highs, while the Nasdaq recorded 105 new highs and 11 new lows.
Source Agencies
