The Dow and S&P 500 hit record highs on Friday as major banks led gains after third-quarter earnings, while the latest producer price data supported expectations. Federal Reserve cuts rates by 25 basis points in November.
In afternoon trading, the Dow Jones Industrial Average rose 317 points, or 0.8%, to 42,771. Blue-chips outperformed their peers to hit an intraday record high of 42,835.48 as major bank stocks boosted the index.
The S&P 500 gained 0.5% and the Nasdaq gained 0.3%. All three major indexes were on track to post gains for the fifth consecutive week.
Major financial companies kicked off earnings season on the day, with JPMorgan Chase rising 5% after the lender reported better-than-expected third-quarter profit and raised annual interest income forecasts.
Wells Fargo rose 5.7% as its profit beat analysts’ expectations.
BlackRock rose 3.1% after the asset manager reported its assets under management hit a record high for the third consecutive quarter.
However, a 7.8% decline in Tesla limited gains on the Nasdaq after the EV maker unveiled its long-awaited car. robotaxiBut it did not provide details on how fast it could scale up production or deal with potential regulatory hurdles.
Meanwhile, Labor Department data showed the producer price index for final demand was unchanged on a monthly basis in September, compared with a 0.1% rise expected by economists polled by Reuters.
Traders held steady bets on a 25 basis point rate cut by the central bank in November, with the probability of pricing in around 88%, According to CME’s Fedwatch,
These figures have come after Thursday consumer price Index The data came in slightly above forecasts, although weekly unemployment claims rose more than expected.
“(The Fed) is trying to thread the needle between not causing inflation through accommodative policy, but also not allowing labor markets to collapse. “Last week’s conflicting data reflects that challenge,” said Matt Rowe, head of portfolio management and cross asset strategy at Nomura Capital Management.
With major indexes trading near record highs and the benchmark S&P 500 up more than 21% year-to-date, third-quarter results will test whether the 2024 rally can be sustained.
“Banks’ success this quarter will not be universal. With valuations where they are … I would say the price of outperformance is already set to some extent,” Rowe said.
Meanwhile, the University of Michigan’s October consumer sentiment index had a preliminary reading of 68.9, compared with analysts’ expectations of 70.8.