Stocks post slight gains as an ugly week on Wall Street comes to a close
Better-than-expected third-quarter earnings by banks lead upswing
U.S. markets rebounded Friday from a midweek scare, including a jarring two-day loss of nearly 1,400 points for the Dow Jones industrial average. Friday’s turnaround was led by solid thirdquarter earnings from the nation’s biggest banks.
It was a freewheeling sell-off, marked by concerns about rising interest rates, tensions over the trade war with China and a startling plunge in the tech sector. But by Friday, stocks were on an upswing after JPMorgan Chase, Wells Fargo and Citigroup all reported quarterly profits. Their good news seemed to steady investor nerves.
The Dow Jones industrial average finished Friday with a gain of 287 points, or 1.2 percent, to 25,339. The blue-chip index still ended the week with a stinging loss, down 4.2 percent.
The Standard & Poor’s 500stock index was up 1.4 percent Friday. The tech-heavy Nasdaq notched a 2.3 percent gain.
The 10-year Treasury yield climbed for the first time in three days, to 3.158 percent. Gold dropped slightly to $1,218.05 an ounce.
Despite the week’s contagious panic, overseas markets also bounced back Friday. The Stoxx Europe 600 was up 0.3 percent. Japan’s Nikkei stock average gained 0.5 percent, and Hong Kong’s Hang Seng increased 2.1 percent.
Similarly, consumer technology companies recovered, with shares of Netflix up nearly 6 percent and Amazon up 4 percent after suffering tough losses earlier in the week.
Lisa Shalett, head of wealth management investment resources at Morgan Stanley, said that there was no cause for alarm and that the week’s losses were within the realm of the ordinary. But she urged investors to trust their instincts. “This is one of those sell-offs that doesn’t feel scary because, so far, it’s playing to the textbook,” Shalett said. “The market is very rationally repricing risk. But we are concerned about the future look for earnings, so we are positioning out portfolios in a very conservative way.”
After the Dow dropped 832 points Wednesday, one of the worst sell-offs since February, President Trump strongly criticized the Fed for the pace at which it’s been raising rates, again signaling that he wanted interest rates to remain low.
“The Fed is making a mistake. They’re so tight. I think the Fed has gone crazy,” he told reporters while traveling in Pennsylvania on Wednesday. “It’s a correction that we’ve been waiting for, for a long time. But I really disagree with what the Fed is doing, okay?”
Concerns about interest rates had rattled bank stocks, with the KBW Bank Index sinking 5.8 percent from last week. But bank shares led the market as trading opened Friday morning, thanks to better-than-expected third-quarter results at the beginning of earnings season. JPMorgan Chase reported a 24 percent jump in profit, to $8.38 billion, mostly thanks to strong consumer business. Citigroup and Wells Fargo both eked out more favorable profits than analysts had predicted.
The markets have been on a historic climb — with the Dow and S&P each hitting dozens of new highs since 2016 — buoyed by a strong U.S. economy and solid corporate earnings, which investors are hoping will lead to strong retail performance in the upcoming holiday season, despite this week’s stumble, said Ivan Feinseth, an analyst with Tigress Financial.
“The strong snapback shows to me that the bulls are still in charge and the market does want to go higher,” Feinseth said.
Early Thursday on CNBC, National Economic Council Director Larry Kudlow heralded the administration’s economic policies and assured the public that “the war on business is over.”
“We are the hottest economy in the world,” Kudlow said. “. . . With all due respect, I don’t think this is anything resembling a sugar high.”
Treasury Secretary Steven Mnuchin met with Chinese central bank governor Yi Gang at a World Bank conference in Indonesia on Thursday, a day after he warned China against “competitive devaluation” of its currency against the U.S. dollar as the trade war escalates. The renminbi had fallen “significantly” during the year, and the Treasury Department is monitoring this “very carefully” to make sure China is not manipulating its currency to gain an advantage in the trade war, Mnuchin told the Financial Times.
Some found reason for optimism after it was announced that Trump would meet with Chinese leader Xi Jinping at next month’s Group of 20 summit in Buenos Aires to discuss the intensifying trade conflict.
“Any kind of softening of the tensions with China would be a huge catalyst for the market,” Feinseth said.
“The strong snapback shows to me that the bulls are still in charge.” Ivan Feinseth, Tigress Financial analyst
Traders on the floor of the New York Stock Exchange. The Dow Jones industrial average rose Friday but still finished the week with a loss.
Screens at a securities company in Beijing show stock price movements. Markets overseas also bounced back Friday.