InfoQuest – The Dow Jones Industrial Average closed higher on Friday (July 12), with the Dow Jones Industrial Average and the S&P 500 hitting new daily highs. The move was driven by expectations that the U.S. Federal Reserve is set to cut interest rates in September. But shares of major banks fell after reporting weak earnings.
The Dow Jones Industrial Average closed at 40,000.90, up 247.15 points, or +0.62%, the S&P 500 closed at 5,615.35, up 30.81 points, or +0.55%, and the Nasdaq closed at 18,398.44, up 115.04 points, or +0.63%.
The Dow Jones and S&P 500 indexes rose to all-time highs before the market closed, paring their gains.
This week, the Dow Jones rose 1.6%, the S&P 500 rose 0.9%, and the Nasdaq rose 0.2%.
Shares of the market’s most valuable companies rebounded after Thursday’s slide, with Apple and India shares rising more than 1%.
Shares of JPMorgan Chase, the world's largest bank, fell 1.2% even as it reported higher second-quarter profits, helped by higher investment banking fees.
Shares of Wells Fargo fell 6% after quarterly interest income estimates fell short of expectations. Meanwhile, shares of Citigroup fell 1.8% despite reporting a rise in investment banking revenue.
Bank stocks in the S&P 500 fell 1.5%.
Tesla shares rose 3% and were the most actively traded stock in the S&P 500 with about $38 billion in volume on Friday.
Data from LSEG IBES shows that analysts expect second-quarter earnings for S&P 500 companies to rise 9.6%, with technology companies expected to post strong earnings growth. But companies in the real estate, industrials and materials sectors will suffer.
Economic data released on Friday suggested that the producer price index (PPI) rose slightly more than expected in June. But it did little to change expectations for a first interest rate cut in September. After the consumer price index (CPI) was revealed to have fallen more than expected on Thursday.
The U.S. Labor Department said Friday that its producer price index rose 0.2% in June, slightly higher than expected. However, given the high cost of servicing, investors still expect the Federal Reserve to begin cutting interest rates in September.
The core producer price index, which includes food and energy, rose 2.6% in June on a year-over-year basis. That was higher than analysts’ expectations of 2.3%, after a 2.4% gain in May. On a monthly basis, the overall producer price index rose 0.2% in June, higher than analysts’ expectations of 2.3%, after a 0.0% or no change in May.
The core producer price index, which excludes food and energy, rose 3.0% in June on a year-over-year basis, above analysts’ expectations of 2.5% from 2.6% in May. On a monthly basis, the core producer price index rose 0.4% in June, above analysts’ expectations of 0.2% from 0.3% in May.
CME Group's FedWatch tool indicates that traders see a 94% chance the Fed will cut rates in September, up from 78% last week.
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