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Stock market today: Stocks rise as big bank earnings roll in
US stocks ticked up Friday after a tech-driven sell-off, as investors assessed earnings reports from big Wall Street banks and waited for inflation data that could test buoyant rate-cut hopes.
The S&P 500 (^GSPC) gained 0.2%, just off the benchmark’s recent record high. The Dow Jones Industrial Average (^DJI) the tech-heavy Nasdaq Composite (^IXIC) also added on 0.2%.
Stocks were stabilizing after the S&P 500 and the Nasdaq both snapped a seven-day win streak on Thursday, as optimism over lower interest rates drove an exodus from Big Tech stocks.
A clutch of quarterly results from Wall Street banks got earnings season going in earnest before the bell, set to test the sector rally that has outstripped the S&P 500 this year.
JPMorgan Chase’s (JPM) profit surged 25% in the second quarter, buoyed by rising investment banking fees and an $8 billion one-time gain linked to Visa, but shares slipped. Wells Fargo (WFC) stock sank 6% after it posted a drop in profit as it missed estimates for interest income. And Citi (C) lost 2% after reporting a 10% rise in profit but maintained a 2024 outlook with modestly lower net interest income.
At the same time, the market is weighing the shift from this year’s winners Nvidia (NVDA) and the “Magnificent 7” techs — which just booked their worst day in almost a year — to the likes of utilities and real estate stocks.
Thursday’s rotation out of techs came as investors took June’s surprisingly mild consumer inflation print as reason for the Federal Reserve to cut rates. The market is almost fully pricing in a reduction in September, and bets are growing on a second cut in December, according to the CME FedWatch tool.
Now the debate has shifted from whether the Fed will act to how often and how deep, with some on Wall Street calling for rates to drop by as much as 0.75% by the end of the year.
Investors looking for easing price pressure on Friday confronted fresh data that complicated the narrative. The Labor Department said its producer price index rose 0.2% from May to June, and registered a year-over-year increase of 2.6%, a larger than expected rise. Less encouraging wholesale inflation data clashes with a string of readings that suggested cooling price pressures.
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