NEW YORK (AP) — U.S. stocks hit a record high Friday as big banks rallied after a series of encouraging profit reports.
The S&P 500 rose 0.6%, breaking its all-time high set earlier in the week and ending a five-game winning streak, while the Dow Jones Industrial Average rose 409 points, or 1%, to set a new record. The Nasdaq Composite Index’s gains were capped by a decline in Tesla stock, and it fell to 0. It lagged the market with a 3% rise.
Wells Fargo rose 5.6% after reporting profit for the latest quarter that beat analysts’ expectations. The company benefited from strong results from venture capital investments and higher fees for investment banking services.
Banks and other financial giants traditionally start the annual earnings season, but JPMorgan Chase & Co. rose 4.4% after reporting a slower decline in profits than analysts had feared. This was the most powerful single force pushing up the S&P 500.
Chief Executive Jamie Dimon said the nation’s largest banks are also still doing share buybacks to send cash to investors, but “given market levels are at least slightly higher. Then,” he said, the pace was gradual.
Meanwhile, BlackRock rose 3.6% after its latest quarterly profit also beat analysts’ expectations. The investment giant managed a record $11.5 trillion in total client assets at the end of September.
Bank profits helped offset declines in Tesla, which fell 8.8% and was the market’s heaviest weight. The electric car maker unveiled its long-awaited robotaxis on Thursday night, but critics highlighted the lack of details about its planned rollout.
Potential rival Uber Technologies Inc. surged 10.8% after the CyberCab announcement, making it one of the strongest forces pushing the S&P 500 higher. Lift increased by 9.6%.
Overall, the S&P 500 rose 34.98 points to 5,815.03. The Dow Jones Industrial Average rose $409.74 to $42,863.86, and the Nasdaq Composite Index rose $60.89 to $18,342.94.
Another automaker, Stellantis, saw its European-listed shares fall 2.8% after announcing several key management changes, including the timing of CEO Carlos Tavares’ departure. . The company’s chief financial officer will also step down as the company, which was created through the merger of PSA Peugeot and Fiat Chrysler, struggles to recover sales in North America.
In the bond market, U.S. Treasury yields were mixed following updates on wholesale inflation and U.S. consumer sentiment.
Prices paid by producers in September increased by 1.8% compared to the same month last year. This was an improvement from August’s year-on-year inflation rate, but not as much as economists had expected. Analysts said the release of a report a day earlier showing consumer-level inflation was not cooling as quickly as economists had expected likely helped ease fears.
A separate report on Friday suggested that U.S. consumer sentiment was lower than economists expected. But Joan Hsu, director of consumer research at the University of Michigan, said the drop in sentiment was still within the margin of error.
Friday’s report solidified traders’ belief that the Federal Reserve will cut its key interest rate by a quarter of a percentage point at its next meeting, according to data from CME Group.
The central bank lowered its forecasts from earlier this month, when some traders had bet on another 0.5 percentage point cut in November, a steeper-than-usual rate cut. These voices have been dispelled by a series of recent economic indicators that have been stronger than expected.
Regardless of how much the Fed cuts rates at its next meeting, the long-term trend in interest rates will continue to be lower, said Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management. This should lead to higher stock prices overall.
Last month, the Federal Reserve lowered its key interest rate from a 20-year high, broadening its focus beyond fighting high inflation to keeping the economy strong.
The yield on the 10-year U.S. Treasury rose to 4.09% from 4.07% late Thursday. The yield on the two-year Treasury note, which more accurately reflects expectations for future Fed policy, fell slightly to 3.95% from 3.96%.
In overseas markets, stock prices fell 2.5% in Shanghai ahead of a briefing scheduled for Saturday by China’s Ministry of Finance. Investors are hoping for a major stimulus package to be announced for the world’s second-largest economy.
South Korea’s Kospi fell 0.1% after the central bank cut interest rates for the first time in more than four years in hopes of stimulating the economy.
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AP Business Writers Matt Ott and Zimo Zhong contributed.
