Stocks Rise for Week as Inflation Fears Calm
Dow Jones Industrial Average and Nasdaq both turn in best weeks since March By Karen Langley July 14, 2023 4:37 pm ET The S&P 500 hovered near its highest close since April 2022 on Friday after signs of cooling inflation this week boosted stocks marketwide. The broad U.S. stock index edged lower for the day after earnings reports from big banks suggested resilience in the economy, but executives cautioned that a recession was still possible. The Dow Jones Industrial Average and the tech-heavy Nasdaq Composite recorded their best weeks since March, rising 2.3% and 3.3%, respectively. The S&P 500 gained 2.4% in a broad-based advance, with all 11 sectors moving higher for the week.
The S&P 500 hovered near its highest close since April 2022 on Friday after signs of cooling inflation this week boosted stocks marketwide.
The broad U.S. stock index edged lower for the day after earnings reports from big banks suggested resilience in the economy, but executives cautioned that a recession was still possible.
The Dow Jones Industrial Average and the tech-heavy Nasdaq Composite recorded their best weeks since March, rising 2.3% and 3.3%, respectively. The S&P 500 gained 2.4% in a broad-based advance, with all 11 sectors moving higher for the week.
Data midweek invigorated hopes that the Federal Reserve’s rate-raising campaign could be drawing to a close. Inflation eased in June to its slowest pace in more than two years, the Labor Department said Wednesday, sending stocks higher. Major indexes rose again Thursday after a separate report showed that producer prices rose at a weaker-than-expected pace.
Investors welcomed the price figures as evidence that the Fed may succeed in taming the red-hot inflation of recent months without plunging the economy into a recession. The central bank is expected to raise interest rates by a quarter-percentage-point later this month, but the signs of slowing inflation could lower the chances of yet more rate increases later in the year.
“It might be that we achieve that elusive soft landing,” said Ellen Hazen, chief market strategist and portfolio manager at F.L.Putnam Investment Management Co.
Hazen said she has been positioned for the stock rally to broaden beyond the big tech stocks that have supported the market this year.
On Friday investors turned their focus to corporate earnings as banks began to share their results.
Bank of America is set to report earnings next week, following results from JPMorgan Chase and others Friday.
Photo: Clarissa Bonet for The Wall Street Journal
JPMorgan Chase, Wells Fargo and Citigroup
beat analysts’ forecasts for profit and revenue, with JPMorgan’s profit jumping 67% and Wells Fargo’s rising 57%. But there were signs of potential challenges ahead. Higher interest rates meant the banks had to pay more to depositors, and customers still withdrew some of their money.JPMorgan shares rose 0.6%, while Wells Fargo shares slipped 0.3% and Citi shares fell 4%.
Investors said they are waiting for reports from smaller lenders before drawing broad conclusions about the health of the sector, which just months ago saw the failures of Silicon Valley Bank, Signature Bank and First Republic Bank.
“Hopefully we’re out of the woods when it comes to a lot of the regional bank problems that we had earlier this year,” said Brian Price, head of investment management at Commonwealth Financial Network.
Shares of
UnitedHealth Group gained 7.2%, leading the S&P 500, after the healthcare and insurance company lifted its earnings guidance.The S&P 500 fell 0.1% for the day, while the Dow industrials added 0.3%, or about 114 points. The Nasdaq Composite edged down 0.2%.
In bond markets, the yield on the benchmark 10-year U.S. Treasury note ticked up to 3.818% from 3.759% Thursday. Yields rise as bond prices fall.
Oil prices rose for a third consecutive week, with Brent crude, the global benchmark, gaining 1.8% to $79.87 per barrel.
Overseas stock markets were mixed Friday. The pan-continental Stoxx Europe 600 fell 0.1%, while in Asia, Hong Kong’s Hang Seng rose 0.3% and Japan’s Nikkei 225 edged down 0.1%.
Write to Karen Langley at [email protected]
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