The S&P 500 powered to a new record Friday, and headed for a fifth winning week as banking behemoths ushered in a promising start to the third-quarter earnings season.
By Samantha Subin and Brian Evans published at CNBC
The S&P 500 powered to a new record Friday, and headed for a fifth winning week as banking behemoths ushered in a promising start to the third-quarter earnings season.
The broad index rose 0.6%, while the Dow Jones Industrial Average gained 340 points, or 0.8%. The Nasdaq Composite added 0.3%, even as Tesla shares tanked 7% on the back of an underwhelming robotaxi event.
“What we’re seeing — and I think you’re seeing it hit pretty hard today, in a good way — is a broadening of the market,” said Craig Sterling, head of U.S. equity research at Amundi US.
The major averages are headed for weekly gains, with the S&P 500 up 1.1% and on pace for a fifth straight positive week. The Dow is toting a 1% gain, while the Nasdaq is up 1.1%.
A strong start to the third-quarter earnings season provided a lift to stocks. JPMorgan Chase rose 4% after topping profit and revenue expectations, while Wells Fargo popped 5% on stronger-than-expected profits. Investors overlooked disappointing revenue and an 11% decline in net interest income.
The outlook suggests that a trend of lower net interest income may be starting to emerge in favor of the banks following a period of high rates, Sterling said.
Beyond earnings, Wall Street weighed fresh data that helped alleviate fears that inflation wasn’t cooling off quick enough. The producer price index, a measure of wholesale inflation, remained unchanged in September and came in below the 0.1% increase expected by Dow Jones. That helped temper some fears sparked by September’s consumer price index, which increased slightly more than expected.
“CPI might have seemed hot, but PPI was not,” said TradeStation’s David Russell. “Overall, these numbers are getting less impactful as inflation moderates. The Fed could still be on track for 25 basis points at the next two meetings.”
Fed funds futures trading suggests a roughly 82% likelihood that the Federal Reserve will dial back interest rates by a quarter point in November, according to the CME FedWatch Tool. However, central bank policymakers will keep a close eye on additional data, which will shape their course on rates.
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Investors should focus more on sector rotations for now, according to BTIG
With increased volatility pumped into the current stock market, BTIG believes that investors should focus more on sector rotations for the time being.
“The things that keep us nervous into month-end include complacent sentiment, the lack of any October shakeout which we tend to see more often than not in an election year, and the fact small-caps are unable to get anything going despite firming economic data following the 50bps rate cut,” chief market technician Jonathan Krinsky wrote. “Given that backdrop, we think the sector rotations are more important right now as the indices churn.”
In particular, Krinsky noted that he’s remaining cautious on the consumer staples and utilities sectors. Meanwhile, healthcare and small-cap stocks may receive an additional boost next month, since November is seasonally their best month of the year.
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Larry Fink says there’s still a role for the IPO market even as private companies grow
Asset managers like BlackRock are hard at work trying to figure out ways to make private credit and private equity more easily accessible to regular investors. However, BlackRock CEO Larry Fink told “Squawk on the Street” that he still believes that the traditional public markets will continue to play a big role in the lifecycle of successful companies.
“I do believe you’re going to see great private companies that are going to want to go public and want to expand. It’s hard as a private company to do M&A, and if you believe that your moat can get larger, you can expand globally better, you’re going to go public in doing that,” Fink said.
— Jesse Pound
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Berkshire takes BofA stake below 10%, will no longer disclose timely
Warren Buffett’s Berkshire Hathaway has reduced its stake in Bank of America to below 10% amid a selling spree that started in mid-July.
In a Thursday night filing, Buffett disclosed the sale of more than 9.5 million shares, split between three transactions made from Tuesday to Thursday. The move brings his holdings down to 775 million shares, or a stake of about 9.987%.
Since the holding is now under the key 10% threshold, Berkshire is no longer required to report its related transactions in a timely manner. Buffett watchers won’t find out the Oracle of Omaha’s next moves for a while. The next 13F filing in mid-November will only reveal Berkshire’s equity holdings as of the end of September.
— Yun Li
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Financial ETF hits record high
The Financial Select Sector SPDR Fund (XLF) jumped 1.9% Friday to reach a new intraday all-time high for the first time since September 3.
Gains by Wells Fargo which gained 4.9%, followed by Bank of America and JPMorgan up more than 3% each led the sector higher.
Financial Select Sector SPDR Fund
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XLF ETF on Friday
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Consumer sentiment down in October, inflation outlook rises
A customer pushes a shopping cart with bags outside of a Whole Foods Market grocery store on August 26, 2024 in El Segundo, California.
Patrick T. Fallon | AFP | Getty Images
Consumer confidence moved lower in October as the outlook for near-term inflation worsened, according to a University of Michigan survey released Friday.
The school’s closely watched Survey of Consumers posted a reading of 68.9, down 1.7% from September and below the Dow Jones consensus forecast for 71. The index, though, was up 8% from a year ago. The current conditions index fell 0.9% on the month.
On inflation, the one-year outlook rose to 2.9%, a 0.2 percentage point increase and the highest level since June. At the five-year mark, the inflation outlook edged lower to 3%, around the level it has been for most of the time since April.
“With the upcoming election on the horizon, some consumers appear to be withholding judgment about the longer term trajectory of the economy,” said Joanne Hsu, the survey’s director.
—Jeff Cox
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Tesla sinks 8% on underwhelming robotaxi event
Tesla shares shed more than 8% after the electric vehicle company failed to impress investors at its long-anticipated robotaxi event.
CEO Elon Musk unveiled Tesla’s Cybercab concept vehicle, which consumers will be able to buy for under $30,000. The company also revealed a larger Robovan.
“We were overall disappointed with the substance and detail of the presentation,” Morgan Stanley said on the heels of the event. “As such, we anticipate TSLA to be under pressure following the event.”
Tesla Inc
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Shares tank after robotaxi event
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S&P 500 opens little changed
The S&P 500 opened little changed Friday, but headed for a fifth consecutive winning week. The Nasdaq Composite dipped 0.3%, while the Dow Jones Industrial Average gained 140 points, or 0.3%.
— Samantha Subin
3 Hours Ago
JPMorgan shares turn red after Dimon tempers buyback expectations
Jamie Dimon, President & CEO,Chairman & CEO JPMorgan Chase, speaking on CNBC’s Squawk Box at the World Economic Forum Annual Meeting in Davos, Switzerland on Jan. 17th, 2024.
Adam Galici | CNBC
JPMorgan shares fell into negative territory in premarket trading Friday after CEO Jamie Dimon poured cold water on buyback expectations on the earnings call.
“We’re going to be a little patient and wait and it’ll be fine, so that’s where we are,” he said. “That’s not going to change. If it changes we’ll let you know. And we do talk to shareholders and they understand that buying stock back at two times the tangible book value is not necessarily the best thing to do because people have their opportunity redeploy it or buy it back at cheaper prices. Markets do not stay higher forever.”
The firm bought back $6 billion worth of shares in the third quarter.
— Yun Li, Leslie Picker
3 Hours Ago
BlackRock beats on earnings as assets top $11 trillion
Asset management giant BlackRock beat estimates on the top and bottom lines for the third quarter as its asset pile continued to climb.
The firm reported $11.46 in adjusted earnings per share on $5.20 billion of revenue. Analysts at LSEG were looking for $10.33 per share on $5.01 billion of revenue.
BlackRock’s assets under management rose to $11.5 trillion, up $2.4 trillion year-over-year. Of that increase, $221 billion came from third-quarter inflows, the company said.
“The opportunities ahead of us have never been greater, and we look forward to driving growth for our clients, shareholders and employees in the years to come,” CEO Larry Fink said in the earnings release.
Shares of BlackRock were up about 2% in premarket trading.
— Jesse Pound
4 Hours Ago
Wholesale prices unchanged in September
A shopper uses a tape measure at the Econ World Trading restaurant equipment warehouse/distribution facility in Fremont, California, US, on Thursday, Aug. 1, 2024.
David Paul Morris | Bloomberg | Getty Images
The producer price index, which measures wholesale inflation, remained unchanged in September. That’s below the 0.1% increase that economists polled by Dow Jones were expecting.
Excluding food and energy, PPI increased 0.2% for the month, in line with expectations.
This comes a day after September’s hotter-than-expected consumer price index report.
— Sean Conlon
4 Hours Ago
See the stocks moving in Friday’s premarket trading
A Wells Fargo branch in Golden, CO.
Adam Jeffery | CNBC
These are the some of the stocks making notable moves before the bell:
- Wells Fargo — Shares of the San Francisco-based lender rose 3%. Adjusted earnings per share topped expectations, even after the bank reported lower revenue in the third quarter than a year ago. It also saw an 11% decline in net interest income.
- JPMorgan Chase — Shares added 2% after the bank reported third-quarter results that topped expectations. Earnings per share came in at $4.37, higher than the $4.01 consensus estimate compiled by LSEG. The company saw $43.32 billion in revenue, also above the $41.63 billion forecast.
- Stellantis — Shares fell about 3% after the automaker announced major management changes, including removing its finance chief.
Click here for the full list.
— Alex Harring
5 Hours Ago
Wells Fargo posts lower earnings and revenue
Wells Fargo reported lower earnings and revenue in the third quarter than a year ago on Friday amid a sizable decline in net interest income.
Wells saw net income fall to $5.11 billion, or $1.42 per share, in the third quarter, from $5.77 billion, or $1.48 per share, during the same quarter a year ago. Revenue dipped to $20.37 billion from $20.86 a year ago.
The San Francisco-based lender posted $11.69 billion in net interest income, a key measure of what a bank makes on lending. The number marked an 11% decrease from the same quarter last year that was less than the FactSet estimate of $11.9 billion. Wells said the decline was due to higher funding costs amid customer migration to higher yielding deposit products.
Shares of the bank still rose 3% in premarket trading after the results.
— Yun Li
5 Hours Ago
JPMorgan rises on strong earnings
Photo taken on May 1, 2023 shows a sign at the JPMorgan Chase & Co. headquarters in New York, the United States.
Michael Nagle | Xinhua News Agency | Getty Images
Shares of JPMorgan rose nearly 2% after the bank topped third-quarter earnings expectations, driven by strong interest income.
Earnings came in at $4.37 per share, topping and LSEG estimate of $4.01. The company posted revenue of $43.32 billion, ahead of the $41.63 billion expected.
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Europe markets open slightly lower
European stocks opened slightly lower on Friday, with most sectors in negative territory.
The pan-European Stoxx traded 0.1% lower shortly after the opening bell, with autos stocks leading the losses.
— Sam Meredith
16 Hours Ago
Warren Buffett’s Berkshire Hathaway cuts Bank of America stake to less than 10%
Berkshire Hathaway sold down its position in Bank of America, bringing its stake below a key reporting threshold.
In a filing with the U.S. Securities and Exchange Commission, Buffett disclosed the sale of more than 9.5 million shares, split between three transactions made from Tuesday to Thursday.
The sale brings the stake down to about 9.987%. That’s below the 10% threshold that would subject Berkshire to report its transactions in timely manner.
Read more about Berkshire’s latest sale from CNBC’s Yun Li here.
—Darla Mercado
18 Hours Ago
Investors should position themselves for a lower interest rate environment, says UBS
Investors should be prepared for a lower interest rate environment as the Federal Reserve continues to monitor inflation data and future rate cuts, according to UBS.
“We continue to recommend investors position for a lower-rate environment, deploying excess cash, money-market holdings, and expiring fixed-term deposits into assets that can offer more durable income,” UBS Global Wealth Management chief investment officer Solita Marcelli wrote on Thursday.
″ These would include bond ladders, medium-duration investment grade bonds, diversified fixed income strategies, and equity income strategies,” Marcelli added. “We also believe lower rates make a favorable backdrop for equities, and favor AI beneficiaries and quality stocks.”
— Brian Evans
18 Hours Ago
Stock futures open little changed
Stock futures changed a little on Thursday as Wall Street prepared for another batch of inflation data.
Futures tied to the S&P 500 ticked up 0.02%, while Nasdaq 100 futures hovered near the flatline. Dow Jones Industrial Average futures added 4 points, or less than 0.1%.
— Brian Evans
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