The U.S. stock market soared on Friday, with the S&P 500 and Dow Jones Industrial Average hitting record highs. The rally came after major banks JPMorgan and Wells Fargo delivered better-than-expected earnings reports, allaying fears of a potential consumer slowdown. Additionally, September’s producer price index (PPI) data, which showed inflation holding steady, further fueled optimism among investors.
Here’s a breakdown of the key factors driving the markets on Friday:
Record Highs for the S&P 500 and Dow Jones
The S&P 500 climbed to an all-time high, closing above 5,800 for the first time, marking its 45th record closing high this year. The Dow Jones Industrial Average also closed at a record level, surging nearly 1% by the end of the session. These gains contributed to a broader rally, with all three major U.S. indexes notching a five-week winning streak. The Nasdaq composite also saw a moderate increase of 0.33%.
Here’s how the major indexes performed by the end of the trading session on Friday:
- S&P 500: 5,815.03, up 0.61%
- Dow Jones Industrial Average: 42,863.86, up 0.97% (+409.74 points)
- Nasdaq Composite: 18,342.94, up 0.33%
Strong Earnings Reports from Major Banks
JPMorgan and Wells Fargo, two of the country’s largest banks, provided a boost to investor sentiment with strong third-quarter earnings reports. Both banks reported robust consumer activity, showing no signs of an imminent slowdown, despite concerns over rising interest rates and inflationary pressures.
JPMorgan CEO Jamie Dimon praised his bank’s performance, but he also issued a stark warning about global geopolitical risks. “Geopolitical conditions are treacherous and getting worse,” Dimon said, underscoring the uncertainty faced by markets due to rising tensions in various parts of the world.
Despite Dimon’s cautionary remarks, the bank’s strong earnings alleviated concerns that higher interest rates might be dampening consumer spending or business investment, which helped fuel the rally in financial stocks.
Cooling Inflation Eases Investor Concerns
Investors also found relief in the latest inflation data, particularly September’s producer price index (PPI) report. The PPI, which measures wholesale inflation, remained flat month-over-month, coming in below economists’ expectations of a 0.1% increase. Core PPI, which excludes food and energy prices, rose 0.1%, again lower than the forecasted 0.2% rise.
This cooling of wholesale inflation contrasts with the slightly hotter-than-expected consumer price index (CPI) report released the day before. The CPI, which measures inflation at the consumer level, had raised concerns about further Federal Reserve interest rate hikes, but the softer PPI report helped ease those fears.
David Russell, a strategist at TradeStation, noted that while inflation is moderating, it may not completely dissuade the Federal Reserve from raising interest rates. “CPI might have seemed hot, but PPI was not. Overall, these numbers are getting less impactful as inflation moderates. The Fed could still be on track for 25 basis points at the next two meetings. Yields have surged lately, but it’s not clear they have much more reason for continued upside,” Russell said.
Looking Ahead: Key Data to Watch
With third-quarter earnings season in full swing, investors will continue to focus on company performance to gauge the health of the economy. Apart from earnings, retail sales data for September, set to be released on October 17, is the next major data release that could influence market direction.
Bank of America analysts expect a strong retail sales report, forecasting a 0.8% rise, while consensus estimates are more conservative, predicting a 0.2% increase. A better-than-expected retail sales figure could bolster confidence in consumer resilience, while a weaker print might stoke fears of a slowdown in consumer spending.
Other Market Movers and Headlines
While the overall market saw significant gains, some individual stocks and sectors faced challenges. Tesla, for instance, saw its stock plunge 10% on Friday after investors were underwhelmed by the company’s much-anticipated robotaxi event. Wall Street’s disappointment with the event raised concerns about the automaker’s growth prospects in the autonomous vehicle space.
Meanwhile, Nvidia, a major player in the semiconductor industry, saw strong demand for its next-generation Blackwell chips, with Morgan Stanley reporting that the chips are sold out for the next 12 months. This news highlighted Nvidia’s continued dominance in the market for artificial intelligence (AI) chips, positioning the company as a key beneficiary of the ongoing AI boom.
In other international developments, a Chinese automaker has taken over Russian plants abandoned by Volkswagen and Mercedes, signaling shifting dynamics in the global auto industry amid geopolitical tensions.
Additionally, the Russian ruble hit its lowest level in a year against both the U.S. dollar and the Chinese yuan, reflecting the ongoing economic pressures facing Russia as it deals with sanctions and a challenging global trade environment.
Commodities, Bonds, and Crypto
In commodities and other markets, oil prices were slightly lower, with West Texas Intermediate crude down 0.45% to $75.51 a barrel, while Brent crude, the international benchmark, dipped 0.55% to $78.96 a barrel. Despite the modest decline, oil prices remain elevated, reflecting concerns about global supply constraints.
Gold prices, meanwhile, rose 1.26% to $2,672.60 an ounce, as investors sought safety amid ongoing geopolitical uncertainties.
In the bond market, the yield on the 10-year Treasury rose by one basis point to 4.083%, as investors continued to monitor inflation trends and the Federal Reserve’s potential rate hike trajectory.
Bitcoin also saw strong gains, rising 4.45% to $62,963, as cryptocurrency markets continued to recover from recent volatility.
