US shares clung to the thinnest gains on Friday after Fed chair Janet Yellen hinted at a delay to raising interest rates.
In a speech which might sap some of the gains of banking stocks this session after JP Morgan Chase (NYSE:JPM) recorded strong Q3 figures, Yellen implied that it might be acceptable to let the economy overheat slightly to heal some of the structural problems that are thought to have been caused by the 2009 recession, such as the slow pace of economic growth.
Although aimed at justifying the central bank’s multi-year response to the financial crisis, it could also be viewed as evidence that a December rate hike is not in the bag just yet.
However, the dovish comments could also risk flaring up wider divisions within the Federal Board itself three voting members of whom already urged a hike in September – and which may explain why stocks politely cheered Yellen’s remarks rather than rallied.
The S&P 500 market bellwether closed barely better than flat, up 0.02% at 2132 – 14 points lower than when it began the week - and led by Salesforce which nudged out Westrock (NYSE:WRK), when it surged with a 5.2% gain to $74.27 after Twitter’s (NYSE:TWTR) stock fell sharply in response to the CEO of Salesforce, one of the final bidders thought to be pursuing a bid for the struggling internet site, declaring itself no longer interested, according to a report by the Financial Times.
Twitter shares have lost a hefty 33% since Wednesday when rumours emerged that some of the potential suitors for Twitter were backing out. They closed Friday down 5.1% at $16.88.
On the week the healthcare sector faced the heaviest selling on the benchmark S&P 500, sliding close to 3%. Illumina (NASDAQ:ILMN) was by far the biggest drag, as the diagnostic-equipment maker shed about a quarter of its value after issuing a sales warning.
The S&P Midcap 400 index ended flat at 1519 while the S&P Smallcap 600 closed down 0.1% at 736 and led by Spectrum Pharma Inc (NASDAQ:SPPI) down 6.8% to $3.95 after litigators at Bronstein, Gewirtz & Grossman, LLC announced a class action against the firm alleging its directors made false and or misleading statements and failed to disclose that the Food and Drug Administration previously questioned whether the data from certain studies were clinically significant.
Early trading
US stocks rose solidly on Friday after bank earnings reports lit up the skyline and retail sales reinforced the view the economy remains on the mend.
The S&P 500 market bellwether was up 0.6% to 2146 after strong earnings from dominant bank JP Morgan Chase (NYSE:JPM) as well as face-saving numbers from rivals like Citigroup (NYSE:C), up 2% to $49.42. But indicating how broad-based the gains were on the bourse, Morgan Stanley (NYSE:MS) was the highest-ranked gainer, in fourth place, up 2.9% at $32.65. Meanwhile JPM itself was way back with a gain of 0.6% to $68.15.
Top gains came from paper group Westrock Company (NYSE:WRK) up 4% to $46.84 and followed by oil group Chesapeake (NYSE:C="" rel="5906">NYSE:CHK) up 3.1% to $6.63.
US retail sales recovered in September after a weak August, climbing by 0.6% on a month-on-month basis, matching estimates and representing a rebound from a 0.2% fall in the previous month.
The S&P Midcap 400 was up 0.8% to 1531 and led by AMD (NASDAQ:AMD) up 9.4% to $7.10 after unveiling Radeon Pro – what it claims to be a powerful new solution for video recording.
Among the S&P Smallcap 600 stocks, whose index advanced by 0.7% to 742, Ruby Tuesday (NYSE:RT), whose shares were battered earlier in the week, was the top gainer of 9.9% to $3.11.
The second-highest riser was a bank, not surprisingly. First NBC Bank Holdings (NASDAQ:FNBC) gained 5.5% to $10.90. A week ago, the holding company for First NBC Bank announced the receipt of a 15-day stay of suspension from trading on The Nasdaq Global Select Market, which will run through October 20.
Earlier this month, First NBC filed a request for a hearing before the Nasdaq Hearings Panel regarding the previously issued Staff Delisting Determination, which resulted from First NBC's past due SEC reports.
Pre-Open
US stocks are indicated to open firmer on Friday after America’s biggest bank JP Morgan Chase (NYSE:JPM) surpassed estimates with its third quarter earnings results while retail sales were a further boost to the world’s biggest economy.
US retail sales recovered in September after a weak August, climbing by 0.6% on a month-on-month basis, matching estimates and representing a rebound from a 0.2% fall in the previous month.
JPMorgan Chase, which passed Wells Fargo (NYSE:WFC) in market value earlier this year, has been a favourite on Wall Street thanks to its record of solid results.
The bank did not disappoint on Friday as it reported revenue for the quarter came in at $25.5bn, up 8% from a year ago and ahead of analysts' consensus estimates of $24bn.
JPMorgan Chase reported a profit of $6.3bn, or $1.58 a share. That was well ahead of the $1.39 per share in earnings that Wall Street expected. JPM shares were up 1.6% to $68.81 before the bell.
The S&P 500 future points to a solid 04% gain.
But other key banks are reported earnings this session.
Scandal-ridden Wells Fargo disclosed earnings two days after the dramatic departure of John Stumpf, and said net income between June and the end of September came in at $5.64bn, down from $5.8bn a year ago. Revenues were little changed at $22bn. Wells Fargo shares were in good stead – up 0.5% at $44.99 pre-market.
Citigroup (NYSE:C) unveiled a slimmer than expected fall in quarterly profits and revenues amid strong results from its bond trading division.
Revenues declined by 4.8% in the third quarter on a year-on-year basis to $17.8bn. That revenue is higher than the $17.3bn Wall Street expected.
Net income fell to $3.8bn, or $1.24 a share, compared with $4.3bn, or $1.35 a share in the same three-month period in 2015. That also came in ahead of forecasts for EPS of $1.15.
Citi shares were 1.7% higher at $49.32 before the open.
But regional banking giant PNC Financial Services Group (NYSE:PNC), like JPMorgan Chase, reported earnings that were better than expected.
After the market closes on Friday, Federal Reserve Chair Janet Yellen will be speaking.