Traders on the floor of the NYSE, Oct. 21, 2022.
Source: NYSE
The Dow Jones Industrial Average Friday as strong earnings results from some of the biggest banks and companies kicked off earnings season.
The 30-stock Dow added 139 points, or 0.4%. Meanwhile, the S&P 500 and Nasdaq Composite declined 0.1% and 0.3%, respectively.
Wall Street is coming off its fourth consecutive day of gains, with the Nasdaq and S&P 500 reaching their highest levels since April 2022.
JPMorgan Chase rose 0.3% after its second-quarter earnings topped expectations. The bank was boosted by higher interest rates and rising interest income. Wells Fargo also gained 0.5% on the back of better-than-expected results.
UnitedHealth shares jumped 8% after the insurance giant reported better-than-expected earnings and revenue. The company also raised the lower end of its full-year earnings guidance.
“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 [that] 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,” Ladner added.
Expectations for this season are downbeat, with analysts forecasting a roughly 7% year-over-year drop in S&P 500 earnings, according to FactSet. That would mark the worst earnings season since the second quarter of 2020, when S&P 500 profits dropped 31.6%.
Markets have been buoyed this week by new economic data that suggested inflation may be cooling. On a weekly basis, the three major averages are well on their way to gains. The broad market index is up 2.5% on the week, while the Dow is up 1.9%, through Thursday’s close. The Nasdaq Composite is the outperformer, leaping 3.5% and on pace for its best week since March 17.
The latest producer price index report showed inflation rose less than anticipated and built on trader optimism from the June consumer price index data, which came out Wednesday. Investors are now considering whether a strong economy illustrated by the recent data could push stocks higher by the end of the year.
“The Goldilocks scenario is alive and well, in terms of declining inflation pressures and [there’s] still fairly robust economic growth. So it’s a pretty good backdrop for risk assets,” said Ladner.