Investing.com — The Dow Jones closed just short of a new closing record despite hitting a record on Friday, after shaking off a modest rebound in wholesale inflation as investors digested better-than-expected quarterly profits from a slew of Wall Street banks.
At 4:00 PM EST (20:00 GMT), the price rose 1.1% to close just below the May 13 record high of 40,003, although it previously hit an all-time intraday high of 40,257.24. The added 0.6% was 0.5% higher
The Wall Street bank kicks off the results season
A trio of Wall Street banks, including JPMorgan Chase, Citi and Wells Fargo which brought the second quarter earnings season to a serious close.
JPMorgan Chase (NYSE:), the largest bank in the United States, reported quarterly results that beat Wall Street estimates, but were overshadowed by disappointing net interest income, a key earnings measure, for the quarter and loan loss provisions that hit the exceeded analyst expectations. amid the fallout of higher interest rates.
Wells Fargo & Company (NYSE:) lowered its net interest income outlook, sending shares down more than 5%, while Citi Group Inc (NYSE:) shares fell nearly 1% after reporting earnings.
Investors are looking forward to robust earnings growth from a wide range of companies, which could potentially extend the rally in U.S. stocks beyond the dominant technology sector.
“If analyst forecasts are correct, this quarter’s year-over-year earnings per share growth will be the highest since the fourth quarter of 2021,” Bernstein analysts wrote in a note.
The tech-heavy Nasdaq suffered a setback of almost 2% on Thursday. This decline was influenced by a shift in investor interest from large-cap stocks to smaller companies, amid growing expectations that the Federal Reserve would cut interest rates in September.
Market participants are now pricing in an 86% probability of a Federal Reserve rate cut in September, up from the 72% probability seen a week earlier.
Inflation is rising modestly, but expectations remain stable
The producer price index, or PPI, which measures the average change over time in the sales prices domestic producers receive for their output, rose to 0.2% last month, versus the 0.1% increase expected by economists on based on the annual figure. June up to 2.6%.
The core PCE, which cuts out food and energy, rose 0.4% in June and 3% for the year through June, beating economists’ expectations of 0.2% and 2.5% respectively were surpassed.
The latest PPI data, combined with the recent CPI data, would raise the core PCE, the Fed’s preferred inflation measure, from 0.08% in May to 0.205% in June, according to Morgan Stanley estimates , and to 2.57% for the twelve months to June. marking “the second weakest this year.”
However, the higher pace of inflation has also been overshadowed by data from the University of Michigan, which shows that US consumer expectations of one-year inflation have fallen to 2.9% from 3% previously.
Tesla limits losses despite UBS downgrade; Carvana accelerates to a 52-week high
Tesla Inc (NASDAQ:) rose 3% on Friday, lifting UBS’s downgrade on the stock to neutral to sell on valuation concerns.
UBS said Tesla’s valuation is becoming increasingly difficult to justify, highlighting a lack of visibility and the risk that growth opportunities, including in artificial intelligence, will take longer than expected.
Carvana Co (NYSE:) rose more than 4% to a 52-week high after BTIG began covering the stock with a buy rating, citing optimism about future market share gains
(Ambar Warrick, Senad Karaahmetovic contributed to this report)
