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U.S. stocks rallied on Friday to close sharply higher as upbeat earnings and strong economic data gave investors’ confidence a boost and also eased fears of a 100 basis point rate hike by the Fed as concerns over surging inflation somewhat waned. All the three major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) climbed 2.1% or 658.09 points to end at 31,288.26 points, ending its five-day losing streak.
The S&P 500 advanced 1.9% or 72.78 points to close at 3,863.16 points, snapping its five-day losing streak. Financial and healthcare stocks were the best performers.
The Financials Select Sector SPDR (XLF) gained 3.4%, while the Health Care Select Sector SPDR (XLV) rallied 2.4%. All the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq jumped 1.8% or 201.24 points to finish at 11,452.42 points, recording its second straight day of gains.
The fear-gauge CBOE Volatility Index (VIX) was down 8.22% to 24.23. Advancers outnumbered decliners on the NYSE by a 4.53-to-1 ratio. On Nasdaq, a 2.36-to-1 ratio favored advancing issues. A total of 10.26 billion shares were traded on Friday, lower than the last 20-session average of 12.31 billion.
Robust Earnings Boost Investors’ Confidence
Stocks rallied on Friday after a fresh set of quarterly reports from two banks, Wells Fargo & Company (WFC - Free Report) and Citigroup Inc. (C - Free Report) gave investors further insight into the current state of the economy. Investors’ morale was low on Thursday after both JPMorgan Chase & Co. (JPM - Free Report) and Morgan Stanley (MS - Free Report) missed earnings and revenue estimates and issue weak guidance.
The mood reversed on Friday, with shares of Wells Fargo jumping 6.2% although the company missed both earnings and revenue estimates. The company cited weak mortgage business and increased loan loss provisions behind its profit declining by almost 50%. Wells Fargo reported second-quarter 2022 earnings of $0.74 per share, missing the Zacks Consensus Estimate of $0.77 per share.
However, Citigroup reported robust profits citing the rising rate environment as a major reason behind the gains. Shares of Citigroup soared 13.2% after the company reported second-quarter 2022 earnings of $2.30 per share, outpacing the Zacks Consensus Estimate of $1.67 per share. Citigroup has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Friday’s gains were primarily driven by financial stocks. However, the upbeat sentiment helped the other sectors also, sending markets on a rally.
Steep Rate Hike Fears Ease
Investors have been getting unnerved as they believe that the Fed would go for a 100 basis point rate hike as the June inflation reading on Thursday showed consumer prices hit a 41-year high. Investors are worrying that Fed’s aggressive rate-hike stance may soon push the economy into a recession. This saw shares taking a beating on Thursday.
However, the fears somewhat waned on Friday after remarks from Fed officials on Thursday and Friday indicated that the Fed could hike interest rate by 75 basis points in its next meeting. On Friday, Atlanta Fed President Raphael Bostic said that he would potentially refrain from supporting a rate hike of more than 75 basis points.
The comments from Bostic coupled with some impressive economic data that showed a jump in retail sales in June and a strong consumer sentiment further gave investors’ confidence a boost. A strong jump in consumer sentiment is proof that people still haven’t got completely unnerved despite a sharp rise in consumer prices.
Economic Data
The Commerce Department said on Friday that retail sales increased 1% in June, slightly higher than economists’ expectations. Although a part of this jump is credited to higher gasoline and food prices, the robust data once again proves that consumers still haven’t succumbed to the 41-year-high inflation.
Besides, the consumer sentiment survey by the University of Michigan showed improvement in June. A reading of the consumer sentiment showed that the index increased to 51.1 in July from its June reading of 50.
However, industrial production fell 0.2% in June, its first decline this year.
Weekly Roundup
Despite Friday’s rally, all the three major indexes finished in the red for the week. The S&P 500 and Nasdaq finished the week 0.9% and 1.6% lower, respectively. The Dow ended the week 0.2% lower.
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Stock Market News for Jul 18, 2022
U.S. stocks rallied on Friday to close sharply higher as upbeat earnings and strong economic data gave investors’ confidence a boost and also eased fears of a 100 basis point rate hike by the Fed as concerns over surging inflation somewhat waned. All the three major indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) climbed 2.1% or 658.09 points to end at 31,288.26 points, ending its five-day losing streak.
The S&P 500 advanced 1.9% or 72.78 points to close at 3,863.16 points, snapping its five-day losing streak. Financial and healthcare stocks were the best performers.
The Financials Select Sector SPDR (XLF) gained 3.4%, while the Health Care Select Sector SPDR (XLV) rallied 2.4%. All the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq jumped 1.8% or 201.24 points to finish at 11,452.42 points, recording its second straight day of gains.
The fear-gauge CBOE Volatility Index (VIX) was down 8.22% to 24.23. Advancers outnumbered decliners on the NYSE by a 4.53-to-1 ratio. On Nasdaq, a 2.36-to-1 ratio favored advancing issues. A total of 10.26 billion shares were traded on Friday, lower than the last 20-session average of 12.31 billion.
Robust Earnings Boost Investors’ Confidence
Stocks rallied on Friday after a fresh set of quarterly reports from two banks, Wells Fargo & Company (WFC - Free Report) and Citigroup Inc. (C - Free Report) gave investors further insight into the current state of the economy. Investors’ morale was low on Thursday after both JPMorgan Chase & Co. (JPM - Free Report) and Morgan Stanley (MS - Free Report) missed earnings and revenue estimates and issue weak guidance.
The mood reversed on Friday, with shares of Wells Fargo jumping 6.2% although the company missed both earnings and revenue estimates. The company cited weak mortgage business and increased loan loss provisions behind its profit declining by almost 50%. Wells Fargo reported second-quarter 2022 earnings of $0.74 per share, missing the Zacks Consensus Estimate of $0.77 per share.
However, Citigroup reported robust profits citing the rising rate environment as a major reason behind the gains. Shares of Citigroup soared 13.2% after the company reported second-quarter 2022 earnings of $2.30 per share, outpacing the Zacks Consensus Estimate of $1.67 per share. Citigroup has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Friday’s gains were primarily driven by financial stocks. However, the upbeat sentiment helped the other sectors also, sending markets on a rally.
Steep Rate Hike Fears Ease
Investors have been getting unnerved as they believe that the Fed would go for a 100 basis point rate hike as the June inflation reading on Thursday showed consumer prices hit a 41-year high. Investors are worrying that Fed’s aggressive rate-hike stance may soon push the economy into a recession. This saw shares taking a beating on Thursday.
However, the fears somewhat waned on Friday after remarks from Fed officials on Thursday and Friday indicated that the Fed could hike interest rate by 75 basis points in its next meeting. On Friday, Atlanta Fed President Raphael Bostic said that he would potentially refrain from supporting a rate hike of more than 75 basis points.
The comments from Bostic coupled with some impressive economic data that showed a jump in retail sales in June and a strong consumer sentiment further gave investors’ confidence a boost. A strong jump in consumer sentiment is proof that people still haven’t got completely unnerved despite a sharp rise in consumer prices.
Economic Data
The Commerce Department said on Friday that retail sales increased 1% in June, slightly higher than economists’ expectations. Although a part of this jump is credited to higher gasoline and food prices, the robust data once again proves that consumers still haven’t succumbed to the 41-year-high inflation.
Besides, the consumer sentiment survey by the University of Michigan showed improvement in June. A reading of the consumer sentiment showed that the index increased to 51.1 in July from its June reading of 50.
However, industrial production fell 0.2% in June, its first decline this year.
Weekly Roundup
Despite Friday’s rally, all the three major indexes finished in the red for the week. The S&P 500 and Nasdaq finished the week 0.9% and 1.6% lower, respectively. The Dow ended the week 0.2% lower.