4.10pm: Stocks climb on positive PPI figures
Wall Street rallied to finish off the week, with all three major indexes posting gains on Friday. The Dow closed above 40,000 for the second time ever, just over 2 points shy of a record high at 40,001 for a 0.6% improvement on opening levels. The S&P 500 gained 0.6% to finish at 5,615 and the Nasdaq rose 0.5% at 18383.
Those numbers translated to weekly gains of 1.6% for the Dow, 0.9% for the S&P 500, and 0.3% for the Nasdaq.
Friday's rally was in part driven by a positive reaction to June’s PPI figures, released in the morning.
“The big picture is that inflation pressures have moderated over the last two years but are still a bit stronger than the Fed would like them to be,” Bill Adams, Chief Economist for Comerica Bank commented.
“With the economy operating in low gear, the Fed thinks the right time to start cutting interest rates is close. But they are planning to cut gradually, slower than in the last couple of interest rate cycles, to ensure that inflation stays on a downward trajectory.”
2.50pm: Russell 2000 index soars
The Russell 2000 index is on track to have one of its best weeks of the year so far amid growing hints of a September rate cut.
The index, which measures the performance of approximately 2,000 of the smallest publicly traded companies in the US, is poised to end the trading week up around 5%, outperforming the S&P 500 and Nasdaq’s respective gains of 0.8% and 0.3%.
The rally in the Russell 2000 is seen as a response to easing inflation concerns, historically beneficial for smaller firms as they can improve profit margins. While the Nasdaq 100, dominated by large-cap technology stocks, has retreated by nearly 2.9% from its recent peak following CPI data, the Russell 2000, composed of smaller-cap companies, has surged by 4.7% year-to-date.
12.10pm: Major bank earnings kick off with JPMorgan profit surge
Wall Street rebounded on Friday after a tech-driven sell-off, with the S&P 500 gaining 0.8%, the Dow Jones rising 0.5%, and the Nasdaq Composite adding 1.2% at the midday point.
The recovery followed a Thursday decline that ended a seven-day win streak for the S&P 500 and Nasdaq, driven by optimism over potential rate cuts.
Earnings reports from major Wall Street banks marked the start of the earnings season, with JPMorgan Chase's profit surging 25% due to rising investment banking fees and a significant gain linked to Visa. However, Wells Fargo's stock fell 6% after missing interest income estimates, and Citi's stock dropped 2% despite a profit increase.
“JP Morgan and Citigroup are some of the worst performers on the S&P 500 today, yet both US banks delivered Q2 earnings results that beat forecasts,” commented Kathleen Brooks at XTB.
“The question for investors now is whether this sell-off is part of the rotation out of the higher performing stocks towards value investing, or is there something within these results that are unsettling investors?”
Investors' expectations for a Federal Reserve rate cut in September have strengthened following a mild June inflation report.
10.17am: Tech stocks rally
The Dow Jones Industrial Index got off to a stellar start today, climbing over 150 points from yesterday’s close.
Tech stocks joined the party, with the Nasdaq 100 similarly jetting up 150 points, while the broader S&P 500 index was also trending in the right direction.
Microchip stocks including Arm Holdings PLC (NASDAQ:ARM), Intel Corp (NASDAQ:INTC, ETR:INL) and Micron Technologies plc were among the top risers, while Tesla Inc (NASDAQ:TSLA) managed to buck the pre-market trend with a 1.8% spike.
8.30am: Wall Street to open higher
The Dow Jones Industrial Index is expected to open 61 points higher this Friday, according to pre-market trades.
The Nasdaq 100, on the other hand, looks set to open effectively flat, having retreated from all-time highs on Thursday.
Tesla Inc (NASDAQ:TSLA) will be a drag on the tech-led index after the electric vehicle titan reportedly delayed its hotly anticipated Robotaxi Day by two months.
The broader S&P 500 index is tipped to open a few points higher at 5,590.
Bank earnings season will get well and truly underway, with BlackRock Inc (NYSE:BLK), Citigroup Inc (NYSE:C), JP Morgan Chase & Co and Wells Fargo and Co all due to report.