US benchmark indices S&P 500 and Dow Jones Industrial Average rallied to fresh highs on October 11 finishing the week on a high note with banking sector majors reporting strong third quarter results.
The S&P 500 rose 0.61% to close at an all-time high of 5,815.03, registering its 45th record in 2024. The Dow jumped 409.74 points, or 0.97%, to finish at 42,863.86. Both the indices’ averages hit fresh all-time highs and closed at records. The Nasdaq Composite added 0.33% to finish at 18,342.94, nearly 2% below its all-time high level.
A strong start to the third-quarter earnings season led to the rally in stocks. The shares of JPMorgan Chase jumped 4.4% after beating profit and revenue projections.
JPMorgan Chase & Co. reported a surprise gain in net interest income for the third quarter and raised its forecast for the key revenue source, even amid expectations that US interest rates will continue to fall.
Revenue from the bank’s Wall Street operations also defied analysts’ estimates, with investment-banking fees surging 31%, topping estimates for a 16% gain. Equity traders notched a 27% revenue increase.
Despite the strong showing, Chief Executive Officer Jamie Dimon offered a somewhat gloomy economic outlook.
Wells Fargo shares also went up 5.6% on the back of stronger-than-expected profits, even as the revenue came in lower than estimates and net interest income dropped 11%.
Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, told Bloomberg News, “We expect earnings season to be solid, including the big banks.” He added that credit card delinquencies are still very low and increased economic activity should drive bank revenues.
A CNBC report explains that Wall Street tends to view the banking sector as a barometer for the health of the economy, thereby setting the tone for the remainder of the earnings season.
However, Kim Forrest, chief investment officer at Bokeh Capital Partners, told CNBC International that the lack of visibility into forward guidance often affects the postearnings stock moves.
US data, including cooler-than-expected September producer price index, also buoyed the stocks on Wall Street.
The data findings signaled that the Federal Reserve may in fact attain a soft landing scenario and reach its 2% goal, which Goldman Sachs economists think upcoming September inflation data may already show.
Tesla shares, meanwhile, declined 8.8% after the unveiling of the Elon Musk firm’s Robotaxi was light on specifics. Its peers Uber Technologies Inc. and Lyft Inc. jumped over 9.5%.