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October 11, 2024 – 7:24 AM PDT
(Reuters) – The S&P 500 rose and the Dow hit a record high on Friday, driven by gains in major banks following third-quarter results, while mixed producer price data backed expectations for a 25-basis-point rate cut by the Federal Reserve in November.
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However, the tech-heavy Nasdaq lagged due to an 8.1% drop in Tesla (TSLA.O), after the EV maker unveiled its long awaited robotaxi, but did not provide details on how fast it could ramp up production or deal with potential regulatory hurdles.
The Dow Jones Industrial Average (.DJI) rose 180.22 points, or 0.42%, to 42,634.34, the S&P 500 (.SPX) gained 13.53 points, or 0.23%, to 5,793.58, and the Nasdaq Composite (.IXIC) lost 16.74 points, or 0.09%, to 18,265.31.
The Dow touched an intraday record high, outperforming its peers as major bank stocks boosted the index.
The Financials index (.SPSY) also hit a record high, climbing 1.8% and leading sectoral gains, while S&P 500 Banks (.SPXBK) stocks ticked 4.5% higher.
Major financial companies kicked off the earnings season on the day, with JPMorgan Chase (JPM.N) rising 5% after the lender reported higher-than-expected third-quarter profit and raised its annual interest income forecast.
Wells Fargo (WFC.N) rose 5.6%, after its profit also beat analysts’ expectations. BlackRock (BLK.N) gained 3.9% after the asset manager reported its assets under management had hit a record high for the third straight quarter.
Meanwhile, data from the U.S. Department of Labor showed the Producer Price Index for final demand was unchanged on a monthly basis in September, compared to the 0.1% rise expected by economists polled by Reuters.
However, core PPI, which excludes the volatile food and energy components, stood at 2.8% on an annual basis, slightly higher than the estimated 2.7% rise.
Traders kept bets steady on a 25-basis-point rate cut from the U.S. central bank in November, pricing in a nearly 84% chance, according to CME’s FedWatch.
“The annual numbers are a little higher and it’s going to take a little time to go through why that is the case, (but) there’s nothing specifically in this number to make markets… change the narrative,” said Steve Sosnick, chief market strategist at Interactive Brokers.
All three major indexes were on track to notching their fifth consecutive week of gains. It would be the best winning streak for the Dow in eight months and the best for the Nasdaq since May.
With major indexes trading around record highs and the benchmark S&P 500 (.SPX) up more than 21% year-to-date, the third-quarter results will test if 2024’s rally can be sustained amid uncertainty over monetary policy, geopolitical risks and the upcoming U.S. presidential elections.
Bar chart shows the year-over-year Q3 2024 earnings growth forecasts across different sectors of S&P 500 as of Sep. 27.
Bar chart shows the year-over-year Q3 2024 earnings growth forecasts across different sectors of S&P 500 as of Sep. 27.
Meanwhile, a preliminary reading of the University of Michigan’s October consumer sentiment index stood at 68.9, compared with analysts’ estimate of 70.8.
Also on deck are speeches from Fed officials Michelle Bowman, Lorie Logan and Austan Goolsbee through the day.
Advancing issues outnumbered decliners by a 2.23-to-1 ratio on the NYSE, with 144 new highs and 12 new lows.
On the Nasdaq, 2,357 stocks rose and 1,222 fell as advancing issues outnumbered decliners by a 1.93-to-1 ratio.
The S&P 500 posted 40 new 52-week highs and one new low, while the Nasdaq Composite recorded 62 new highs and 47 new lows.
Reporting by Lisa Mattackal and Pranav Kashyap in Bengaluru; Editing by Pooja Desai
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