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The US stock market finished trading with a significant increase in quotations on the back of released statistics on retail sales and consumer sentiment, as well as financial results of the largest US banks, which exceeded analysts’ expectations.
Dow Jones up 2.15%
The broad market index S&P 500 and Nasdaq Composite added 1.92% and 1.79%, respectively. Twenty-nine components of the main market benchmark out of thirty showed positive closing results. The only stock that showed a decline in the trading session on Friday, July 15, was Walmart (WMT), which lost 0.13% token.
The leader of growth in Dow Jones — UnitedHealth (UNH) — gained 5.43% at once. The top five performers include all representatives of the financial sector. JPMorgan (JPM) is up 4.58%, American Express (AXP) and Goldman Sachs (GS) add almost 4.4%.
Despite the positive trading results on Friday, all major US stock indices closed the week with losses. The Dow Jones was down almost 0.2%, while the S&P 500 and Nasdaq recorded declines of 0.9% and 1.6%, respectively. The positive movement of the session reduced the distance of the S&P index from its highs to 19%.
The day before, investors assessed the conflicting quarterly results of JPMorgan Chase and Morgan Stanley, as well as the level of aggressiveness of the monetary policy of the Federal Reserve System in connection with this. The market showed weakness on Thursday, but Friday’s data from the largest US banks allowed us to hope for the best.
Wells Fargo supported the S&P 500
Warren Buffett’s favorite bank profit Wells Fargo (WFC) fell by almost half to $3.12 billion. At the same time, adjusted earnings reached $0.82 per share, which exceeded Wall Street analysts’ expectations by $0.02.
Despite the decline in revenue, the market took note of the positive comment from WFC CEO Charles Scharf, who mentioned the clear economic benefit of raising interest rates. The direct benefit of the Fed’s actions “more than offsets” further pressure on fees in their mortgage division and other operations, the lender’s chief said.
Although the market had anticipated that Wells Fargo would be the beneficiary of the rate hike, the retail banking leader gained 6.17%. According to the results of the current year, the papers of Wells Fargo (WFC) show a decrease of 19%, and almost completely correlate with the industry benchmark KBW Bank Index.
The crazy financial results of Citigroup (C) for the second quarter completely surprised analysts’ expectations in all respects. In fact, it was they who became the growth driver not only for the financial sector, but also for the market as a whole. Quarterly revenue increased 11% to $19.64 billion, compared to $18.22 billion expected. Earnings per share was $2.19. This is 27% lower than the same period last year, but it is significantly higher than the consensus forecast of analysts, who counted on a figure of $1.68.
Citigroup CEO Jane Fraser noted the good performance in corporate cash management, the successful performance of the trading division, as well as the credit card department. The CEO of City has announced the suspension of its own share buyback program until “when it makes sense”, but this fact is not negative. Citigroup (C) shares gained more than 13.2% in New York trading, leading the gains in the S&P 500 index.
Simultaneously with banking income, investors had the opportunity to evaluate the released statistics on retail sales and the consumer sentiment index from the University of Michigan, which turned out to be clearly higher than expected. These figures may be the reason for a softer Fed policy at the July meeting. The likelihood that the regulator will not increase the step of raising the rate to 100 basis points, and will limit itself to raising by 0.75% has increased significantly.
In line with the above, Atlanta Fed President Rafael Bostic spoke out, who is ready not to support a rate hike with the refrain that its rapid growth could “undermine a lot of what works well” at the moment.
In conclusion, let us also mention the positive mood in the oil market. Quotes, of course, did not return losses from a powerful decline the day before, however, futures contracts for the West Texas standard West Texas Intermediate (WTI) managed to add almost 2% and leave for the weekend at a price of $95.57 per barrel. North Sea Brent at the same time exceeded the price tag of $101.