Stocks rose on Friday as investors digested bank earnings, but the S&P 500 remained on track for its best week since November and a second straight week of gains as investors argued that inflation will ease in 2023.
All major indices traded well off session lows. The broader S&P 500 and Nasdaq Composite fell 0.4%. The Dow Jones Industrial Average fluctuated in a straight line.
Stocks are still heading for a winning week, with the Nasdaq accelerating for its second week in a row and its best weekly performance since November. The tech-heavy index rose more than 3% for the week. The S&P advanced almost 2%, while the Dow added more than 1%.
According to Baird investment strategy analyst Ross Mayfield, bank earnings weighed on stocks to start the day, but sentiment changed late in the morning after investors shook off the expected negative news anyway.
“It really wasn’t expected to have a blockbuster quarter for the financial sector,” he said. “It just provides a bit of a wave of sentiment and could set the tone for how investors view the broader picture as banks head into earnings season.”
By late morning, most major bank stocks had climbed into the green.
JPMorgan Chase posted earnings that beat expectations, but the bank warned it was setting aside more money to cover loan losses because a “soft recession” is its “central condition.” The bank made a $2.3 billion allowance for loan losses in the quarter, a 49% increase over the third quarter.
Bank of America fell slightly, despite reporting better-than-expected fourth-quarter earnings. The company echoed JPMorgan’s concerns about the economy. this It is poised for a mild recession in 2023Including a scenario where unemployment rises rapidly, CEO Brian Moynihan said on a call with investors.
Wells Fargo was lower after reporting earnings for the latest quarter it was cut in half.
“Frankly, the market has moved up pretty well over the last couple of weeks, there hasn’t been a catalyst, and so there’s a little profit to be made from earnings season,” Mayfield said.
Elsewhere, Delta Air Lines reported earnings and revenue that beat estimates for the final quarter of 2022. However, shares are down about 4%. Investors were waiting for these results to get more information about the health of the economy.
In economic data, a University of Michigan consumer sentiment survey showed annual inflation fell to 4%, the third straight monthly decline and the lowest since April 2021.
After the December CPI report released on Thursday, prices fell 0.1% compared to November. Although prices rose 6.5% faster than a year earlier, the results raised hopes that the Federal Reserve will soon slow its hike.
