S&P 500 falls slightly on Friday, but heads for its second winning week in a row

Wells Fargo's Mike Mayo says our base case is that banks will grow 50% this year

Stocks fluctuated on Friday as investors looked at bank earnings, but the S&P 500 stayed on track for its best week since November and a second straight week of gains as investors bet Inflation will decrease in 2023.

All major indices traded well after session lows. The S&P 500 and Nasdaq Composite fell 0.4%. The Dow Jones Industrial Average fluctuates in a straight line.

Stocks are still headed for a winning week, with the Nasdaq accelerating for a second straight week of gains and its best weekly performance since November. The tech-heavy index is up more than 3% for the week. The S&P gained nearly 2%, while the Dow gained more than 1%.

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Bank earnings weighed on equities early in the day, but sentiment reversed late in the morning after investors appeared to ignore the news, according to Ross Mayfield, investment strategist at Baird. negative news is expected to some extent.

“Financial industries are not really expected to have a blockbuster quarter,” he said. “It’s just brought in a bit of a sentiment wave, and since banks lead earnings season, they can shape how investors look at the bigger picture.”

By the end of the morning, most of the big bank stocks were in the green.

JPMorgan Chase posted revenue that beat expectations, but the bank warned that it was setting aside more money to cover credit losses as a “mild recession” was its “focus case”. The bank posted a $2.3 billion provision for credit losses for the quarter, up 49% from the third quarter.

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Bank of America fell slightly despite reporting better-than-expected earnings for the fourth quarter. The company echoed JPMorgan’s concerns about the economy. CEO Brian Moynihan said on a call with investors it is bracing for a mild recession in 2023, including a scenario where the unemployment rate rises rapidly.

However, Wells Fargo was lower after it reported its profit for the last quarter was cut in half.

“Honestly, the market has recovered quite well over the past few weeks without a catalyst, and so there may be only a little bit of profit from the ongoing earnings season,” Mayfield added.

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Elsewhere, Delta Air Lines reported better-than-expected earnings and revenue for the final quarter of 2022. Shares fell about 4%, however. Investors are waiting for these results to better understand the health of the economy.

On economic data, the University of Michigan’s survey of consumer sentiment showed the one-year inflation outlook fell to 4%, the third consecutive monthly decline and the lowest since April. year 2021.

That follows the December CPI report, released on Thursday, which showed prices down 0.1% year-on-year. Although prices rose at a 6.5% year-on-year pace, the results This raises hopes that the Federal Reserve may soon decelerate price increases.


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