U.S. stocks ended mixed on Friday as investors weighed strong earnings results from some of the biggest banks.
The Dow Jones Industrial Average rose 113.89 points, or 0.33 percent, to 34,509.03. The S&P 500 lost 4.62 points, or 0.10 percent, to 4,505.42. The Nasdaq Composite Index declined 24.87 points, or 0.18 percent, to 14,113.70.
Eight of the 11 primary S&P 500 sectors ended in red, with energy and financials leading the laggards by going down 2.75 percent and 0.68 percent, respectively. Health and consumer staples led the gainers by rising 1.50 percent and 0.35 percent, respectively.
U.S. stocks were trading mixed on Friday after some U.S. banks reported earnings results for the second quarter and kicked off the earnings season.
JPMorgan Chase, Citigroup and Wells Fargo all reported revenue and profit that beat analysts’ expectations. Among them, JPMorgan’s profit surged 67 percent from a year ago and Wells Fargo achieved a 57 percent increase.
“What we’ve seen out of big bank earnings, especially JPMorgan, is pretty resilient,” said Scott Ladner, chief investment officer at Horizon Investments. “We’re seeing right now default rates are still historically incredibly low and not showing signs of skyrocketing higher. So that’s a good sign for consumers and the economy.”
Investors were also digesting a key survey of consumer sentiment. The University of Michigan’s consumer sentiment index rose to a reading of 72.6 in July, the highest level since September 2021, far exceeding market expectations of 65.5, according to preliminary data released on Friday.
The new survey showed Americans’ confidence in the economy has recently boomed as inflation eased and the labor market remained resilient.
Meanwhile, market sentiment continued to benefit from inflation data released earlier this week, with most investors believing that the Federal Reserve’s rate hike cycle is nearing its end.
“This moderation in economic activity and inflation goes beyond what many Fed officials would consider their model expectations. Such a deceleration, even if associated with a soft landing, could see them adjusting their current hawkish stances,” said Morgan Stanley’s Chief Fixed Income Strategist Vishy Tirupattur.
“The light at the end of the tightening tunnel is getting brighter and investors are increasingly confident of emerging after one more hike in two weeks. At which point the focus will turn to the economy and whether a soft landing can still be achieved before the discussion pivots to rate cuts,” said Craig Erlam, senior market analyst at OANDA, a supplier of online multi-asset trading services.
“The next risk comes from earnings season which gets underway today,” he added.
