Benchmarks finished in the green on Friday following encouraging earnings results from three banking behemoths – JPMorgan Chase, Wells Fargo and Citigroup. Moreover, at a Boston Fed conference, the Fed Chairwoman Janet Yellen said that it is better to run a "high-pressure economy" with a tight labor market and strong aggregate demand. However, poor start to the earnings season, China’ weak trade data and lack of indications from the Fed about rate hike possibilities weighed on investor sentiment for the week. All the three key U.S. indexes registered declines for the second straight week.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) increased 0.2%, to close at 18,138.38. The S&P 500 rose 0.43 points to close at 2,132.98. The tech-laden Nasdaq Composite Index closed at 5,214.16, gaining 0.83 points. The fear-gauge CBOE Volatility Index (VIX) increased 3.4% to settle at 16.12. A total of around 6 billion shares were traded on Friday, lower than the last 20-session average of 6.6 billion shares. Advancers marginally outpaced declining stocks on the NYSE. For 49% stocks that advanced, 48% declined.
Strong Earnings Results From Banks Boost Markets
JPMorgan Chase & Co.’s (JPM - Analyst Report) third-quarter earnings per share (EPS) and revenues beat the Zacks Consensus Estimate. Although, its quarterly revenues rose 8% year-over-year, its earnings fell 6% year-on-year. Shares of JPMorgan fell 0.3%. (Read More: JPMorgan Q3 Earnings Easily Top on Solid Trading & Lending ).
Also, Wells Fargo & Company’s (WFC - Analyst Report) third-quarter EPS outpaced the Zacks Consensus Estimate by a penny, but was lower than prior-year quarter’s earnings by a couple of cents. Wells Fargo’s shares declined 0.1%. (Read More: Wells Fargo Tops Q3 Earnings, Costs & Provisions Up )
Additionally, shares of Citigroup Inc (C - Analyst Report) rose 0.3% after reporting third-quarter EPS and revenues, higher than the Zacks Consensus Estimate. However, both the top and bottom line figures decreased year-over-year. (Read More: Citigroup Tops Q3 Earnings, Trading Revenues Improve )
JPMorgan has Zacks Rank #2 (Buy) while Wells Fargo and Citigroup have Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Following these encouraging earnings results, the Financial Services Select Sector (XLFS) gained 0.8% and was the best performer among the S&P 500 sectors.
Look At Fed Chair’s Speech
In her speech at the 60th economic conference in Boston, Fed Chairwoman Janet Yellen said that following the 2007-08 Great Recession, some level of damage still persists. So in order “to reverse these adverse supply-side effects” Yellen said that it is wise to run a "high-pressure economy with robust aggregate demand and a tight labor market.”
Economic Data To Focus On
Also, the U.S. Bureau of Labor Statistics reported that the Producer Price Index (PPI) rose 0.3% in September, higher than the consensus estimate of 0.2% rise. Further, core-PPI advanced 0.2% last month, better than the consensus estimate of 0.1%. Core PPI increased 1.5% year-on-year, registering its highest 12-month rise in two years.
Business inventories rose by 0.2% in August, while University of Michigan consumer sentiment dropped to 87.9 in October. According to the Commerce Department, sales at retail stores and restaurants advanced 0.6% in September from the prior month to a seasonally adjusted $459.8 billion. This was the highest pace in last three months.
Benchmarks Register Second-Straight Weekly Drop
For the week, the Dow, the S&P 500 and the Nasdaq decreased 0.6%, 1% and 1.5%, respectively. Investors remained nervous over weak Chinese trade data. Also, Alcoa Inc.’s (AA - Analyst Report) shares fell after the company’s earnings and revenue grew less-than-expected.
Concerns about Deutsche Bank AG (DB - Analyst Report) ’s liquidity adversely affected markets, while Wells Fargo & Co (WFC - Analyst Report) added to the atmosphere of mistrust. Moreover, Fed policy makers were divided over the timing of a rate hike, which also had a negative impact on investor sentiment.
Stocks That Made Headlines
PNC Financial Tops Q3 Earnings, Expenses High
The PNC Financial Services Group, Inc.’s (PNC - Analyst Report) third-quarter 2016 earnings per share beat the Zacks Consensus Estimate but, the bottom line declined 3% year over year. ( Read More)
Verizon Looks to Cut Costs, Shuts Down 7 Call Centers
Verizon Communications Inc. (VZ - Analyst Report) plans to close seven call centers across five states that may lead to job loss of 3200 employees. (Read More)
Salesforce Not in the Bidding Race for Twitter: Marc Benioff
Shareholders of salesforce.com Inc. (CRM - Analyst Report) breathed a sigh of relief last Friday after the company’s Chief Executive Officer (CEO) Marc Benioff said that it will not be bidding for social media giant, Twitter Inc. (TWTR - Analyst Report) . ( Read More)
J.B. Hunt Misses Q3 Earnings, Beats Sales Estimates
J.B. Hunt Transport Services Inc. (JBHT - Analyst Report) reported mixed third-quarter 2016 financial results. The company’s bottom line missed the Zacks Consensus Estimate, whereas the top line surpassed expectations. ( Read More)
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