Wall Street Mixed After Release of Bank Performance to US Inflation

 The United States (US) or Wall Street stock exchange was mixed in trading Friday, January 12 2024. The Dow Jones index weakened as market players analyzed the release of company earnings performance in the fourth quarter of 2023.

Image : Google.com

Apart from that, market players are also digesting this week's closely watched inflation report. Quoted from CNBC, Saturday (13/1/2024), at the close of Wall Street trading, the Dow Jones index weakened 118.04 points or 0.31 percent to 37,592.98. The S&P 500 index rose 0.08 percent to 4,783.83. The Nasdaq index edged up 0.02 percent to 14,972.76.

UnitedHealth shares dragged the Dow Jones index lower. UnitedHealth shares fell almost 3.4 percent even though the company announced profit and revenue growth in the fourth quarter. In addition, Delta Air Lines airline shares fell almost 9 percent even though its profit performance exceeded expectations.

A number of large banks also released earnings on Friday this week. Bank of America shares fell 1.1 percent after posting a decline in profit in the fourth quarter. Meanwhile, Wells Fargo shares slipped 3.3 percent despite posting higher profits for the quarter. JPMorgan Chase shares fell 0.7 percent after profits fell 15 percent from a year earlier.

Meanwhile, Citigroup shares rose more than 1 percent after the company announced it was cutting 10 percent of its workforce. Earlier at the start of the trading session, the bank posted a quarterly loss of USD 1.8 billion after incurring several large bills.

"This is a bit of a reversal of some of the trends and rallies that were in the fourth quarter, but I think the market is in a wait-and-see mode for inflation, and also what will happen in earnings season," said Edward Jones Senior Investment Strategist Mona Mahajan.

He added that the driver for 2024, like the others, will be profit and valuation growth. "This year there will probably be an expansion of market participation," he said.

On the other hand, investors also received encouraging news regarding inflation on Friday this week with wholesale prices unexpectedly falling 0.1 percent in December. The data follows more widely followed consumer price data on Thursday this week which was released slightly hotter than economists expected. Consumer prices rose 0.3 percent in December and 3.4 percent on an annual basis.

"The producer price index (PPI) emphasized that the increase in the consumer price index (CPI) in December was likely to only happen once," said Comerica Bank economist, Bill Adams.

He said the way was open for the Federal Reserve (the Fed) or the United States central bank to cut interest rates in 2024 and slow the pace of reducing its balance sheet.

This week, the main average indices recorded increases on Wall Street. The Dow Jones Index rose 0.34 percent. The S&P 500 index added 1.84 percent and the Nasdaq index soared 3.09 percent as of Friday trading this week.

Wall Street closes on January 11, 2024

As previously reported, the United States (US) or Wall Street stock exchange was mixed in trading on Thursday, January 11 2024. The benchmark index on Wall Street tended to be flat after the release of inflation data reflecting the increase in consumer prices in December.

Quoted from CNBC, Friday (12/1/2024), at the close of Wall Street trading, the Nasdaq index was flat to 14,970.19. The Dow Jones Index edged up 15.29 points or 0.04 percent to 37,711.02. The S&P 500 index edged down 0.07 percent to 4,780.24.

At the start of the trading session on Wall Street, the S&P 500 index was above its closing record at the highest level of 4,796.56.

The consumer price index report in December was slightly higher than expected reflecting a 0.3 percent increase in consumer prices in the month bringing the annual rate to 3.4 percent. Economists surveyed by Dow Jones predict the consumer price index (CPI) or inflation will rise 0.2 percent in December, and 3.2 percent year over year (YoY).

However, core inflation excluded volatile food and energy prices, in line with expectations showing persistent, but easing inflationary pressures.

Data released on Thursday this week suggests future interest rate cuts may be slower.

"This rise in the CPI is an important reminder of the unpredictable nature of the economic recovery and the gloomy macroeconomic data," said Global X Chief Investment Officer, Jon Maier.

He added that the market may need to prepare for potential volatility because the Federal Reserve (the Fed) could maintain or potentially intensify its restrictive monetary policy in response to this inflationary pressure.

Waiting for Financial Reports

Yields initially rose on inflation data. The yield on 10-year US bonds reached a high of 4.068 percent before dropping to 3.98 percent.

CFRA Chief Investment Strategist, Sam Stovall, said that Wall Street's movements in trading on Thursday this week were partly influenced by weak expectations regarding the Fed's interest rate cut schedule and anxiety about corporate profits. This week begins the release of financial reports for the fourth quarter of 2023. A number of banking giants will release financial reports, including Bank of America, Wells Fargo, and JPMorgan Chase.

“Profits add to investor anxiety. "We are in the pre-season period, where there is a bit of nervousness, because on December 31, earnings were going to be up 2.1 percent on the last quarter and are now forecast to be up 1.7 percent," Stovall said.

According to Carson Group Global Macro Strategist Sonu Varghese, Friday's major bank profits will reflect a generally strong consumer outlook which will provide a better picture for the United States economy and gross domestic product (GDP) growth.

Share this post