S&P 500 Closes at Month-Highs, Indexes Gain Week as Earnings Kick in By Reuters

© Reuters. Traders work on the trading floor of the New York Stock Exchange (NYSE) in New York City, US, January 5, 2023. REUTERS/Andrew Kelly

Written by Caroline Valtkevich

NEW YORK (Reuters) – The Stock Exchange and the Nasdaq closed at their highest levels in a month on Friday, as shares of JPMorgan Chase and other banks rose following their quarterly results that kicked off the earnings season.

The three major indices also posted strong gains for the week, leaving the S&P 500 up 4.2% so far in 2023, and the Cboe’s Volatility Index — Wall Street’s measure of fear — closed at a one-year low.

On Friday, financials were among the sectors that gave the S&P 500 the most support.

JPMorgan Chase & Co (NYSE:) and Bank of America Corp (NYSE:) both beat quarterly earnings estimates, while Wells Fargo (NYSE:) & Co Citigroup Inc (NYSE:) lowered its quarterly earnings estimate.

But shares of all four companies rose, along with the S&P 500 Banking Index, which closed up 1.6%. JPMorgan shares rose 2.5 percent.

However, the largest banks on Wall Street stockpiled more money for rainy days to prepare for a possible recession and reported weak investment banking results while showing caution about forecasting income growth. They said higher interest rates helped boost profits.

The strategists said investors will be watching for more guidance from company executives in the coming weeks.

“He’s shifted the focus to earnings,” said Peter Tose, chairman of Chase Investments in Charlottesville, Virginia.

“Even though earnings were basically good, people are kind of holding back, and you’re going to see a wait-and-see situation with stocks” as investors hear more from company executives.

According to Refinitiv data, earnings for S&P 500 companies are expected to decline year-over-year by 2.2% for the quarter.

Also providing some support to the market on Friday, the University of Michigan survey showed an improvement in US consumer confidence, with inflation expectations for one year in January falling to the lowest level since spring 2021.

The index rose 112.64 points, or 0.33%, to 34,302.61, and the Standard & Poor’s 500 rose 15.92 points, or 0.40%, to 3,999.09 points, and added 78.05 points, or 0.71%, to 11,079.16.

The S&P 500 closed at its highest level since December 13, while the Nasdaq closed at its highest level since December 14.

Over the course of the week, the S&P 500 is up 2.7% and the Dow is up 2%. The Nasdaq rose 4.8 percent, its biggest weekly percentage gain since November 11.

The US stock market will be closed on Monday due to the Martin Luther King Jr. Day holiday.

Thursday’s Consumer Price Index and other recent data fueled hopes that the continued downward trend in inflation could give the Federal Reserve room to backtrack on rate hikes.

Money market participants now see a 91.6% chance that the Fed will raise the benchmark interest rate by 25 basis points in February.

Among today’s losers, Tesla (NASDAQ) shares fell 0.9% after it cut prices for its electric cars in the US and Europe by as much as 20% after missing delivery estimates for 2022.

In other earnings news, shares of UnitedHealth Group Inc (NYSE:) rose after beating Wall Street expectations for fourth-quarter earnings, but the stock closed lower on the day.

Shares of Delta Air Lines Inc (NYSE) fell 3.5% as the company forecast first-quarter earnings that fell short of expectations.

Trading volume on US exchanges reached 10.77 billion shares, compared to an average of 10.81 billion for the full session over the last 20 trading days.

Advance issues outnumbered declining issues on the NYSE by a ratio of 1.79 to 1; On Nasdaq, the ratio was 1.78 to 1 in favor of advanced traders.

The S&P 500 posted 12 new 52-week highs and 2 new lows; The NASDAQ recorded 105 new highs and 8 new lows.

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