U.S. stocks on Friday were on track to eke out gains, as market participants digested a slew of earnings from major banks and health insurance giant UnitedHealth, while also parsing economic data that showed a fall in short-term inflation expectations.
JPMorgan (JPM), Bank of America (BAC), Citigroup (C) and Wells Fargo (WFC) were among the major banks that reported results on Friday. Investors initially had a subdued reaction to the numbers, as they focused on a rise in expenses and provision losses, along with disappointing outlooks. However, the stocks reversed course through the day and pushed higher, helping markets.
UnitedHealth (UNH) was another big name that reported results, with its stock paring its gains. Delta Air Lines (DAL) slipped after its quarterly report.
Into the last hour of trading, the Nasdaq Composite (COMP.IND) was up 0.54% to 11,060.37 points, having slipped as much as 1% earlier in the session. The tech-heavy index was on track to post a six-day winning streak.
The blue-chip Dow (DJI) was higher by 0.24% to 34,271.61 points. The benchmark S&P 500 (SP500) advanced 0.31% to 3,995.59 points. Both indices were set to finish higher for a fourth straight session each.
Of the 11 S&P sectors, eight were higher, led by Consumer Discretionary and Financials. Utilities, Real Estate and Industrials were the three losers.
Markets also got a bump post the open after the University of Michigan’s advance reading of consumer sentiment in January climbed. Furthermore, the data showed that year-ahead inflation expectations retreated for a fourth straight month.
“One-year inflation expectations fell by 0.4pp to 4.0%, the lowest since April 2021, but five-to-10-year expectations nudged up a tenth to 3.0%. That’s likely noise rather than signal; this measure has been stuck close to 3% since the summer of 2021. But it is sensitive to food and gas prices, and we expect it to drop over the next few months, returning to the pre-Covid trend, about 2-1/2%. Inflation expectations are coming back under control,” Pantheon Macro’s Ian Shepherdson said.
Turning to the bond markets, yields advanced after the previous session’s decline. The 10-year Treasury yield (US10Y) rose 6 basis point to 3.51%. The 2-year yield (US2Y) was up 10 basis points to 4.24%.
“Every relevant measure of the term structure is now deeply inverted,” MKM’s Michael Darda said. “Going back to the mid-1950s, any sustained inversion in the 10s1s Treasury curve presaged recession (10 for 10 in the last 10 recessions). There was only one ‘miss’ in 1966, but that inversion did foreshadow a sharp slowdown, a profits recession, and a bear market.”
Among active stocks, Tesla fell after cutting prices of some U.S. models. Other automobile makers also retreated, with Ford (F) and General Motors (GM) among the top three percentage losers on the S&P 500 (SP500).