A wave of optimism swept through Wall Street on Friday, propelling both the S&P 500 and the Dow Jones Industrial Average to record highs. The driving force behind this surge was a remarkable rally in financial stocks, fueled by strong earnings from major U.S. banks. Investors seemed to brush aside mixed economic data released earlier in the day, focusing instead on the positive news from the banking sector.
The S&P 500, as measured by the SPDR S&P 500 ETF Trust (SPY), soared past the 5,800-point mark, gaining 0.7% for the day and bringing its year-to-date returns to a robust 23%. The Dow Jones Industrial Average, tracked by the SPDR Dow Jones Industrial ETF (DIA), mirrored this upward trend, rising 0.8% to reach 42,780 points, breaking previous records set in late September.
The financial sector was undoubtedly the star performer on Friday. The Financial Select Sector SPDR Fund (XLF) rallied a strong 1.9%, marking its most significant gain since November 2023 and hitting a fresh record high. This surge was driven by a string of U.S. banks reporting better-than-expected third-quarter earnings, reinforcing confidence in the sector’s resilience.
JPMorgan Chase & Co. (JPM) delivered a robust performance, with Q3 earnings per share (EPS) reaching $4.37, surpassing the consensus estimate of $4.00. Shares jumped over 4% by mid-morning trading in New York. Goldman Sachs analyst Richard Ramsden highlighted a “robust beat across every line,” for the largest U.S. bank.
Wells Fargo Corp. (WFC) saw its shares soar 6.2% after posting an EPS of $1.42, exceeding expectations despite cautious guidance on net interest income for the year. Bank of New York Mellon Corp. (BK) also delivered stronger-than-expected results, with BK shares rising 1.8%.
BlackRock Inc. (BLK) gained 3.4% following upbeat earnings and revenue, as performance fees significantly surpassed estimates. BlackRock shares reached a new record high.
The rally wasn’t limited to the largest banks. Other major players, including Bank of America Corp. (BAC), Citigroup (C), Goldman Sachs Inc. (GS), and Morgan Stanley (MS) also experienced gains ranging from 2% to 4.8%. Morgan Stanley, in particular, set new all-time highs.
The strength in large-cap banks spilled over to regional players, with the SPDR S&P Regional Banking ETF (KRE) rallying 3.5%. This boost contributed to the Russell 2000 index gaining 1.3%, outperforming its large-cap counterparts.
While the bank earnings story dominated the headlines, Friday also saw the release of mixed economic data. The Producer Price Index (PPI) came in higher than expected, while the Michigan Consumer Sentiment report for October was weaker than anticipated.
The headline PPI reached 1.8% year-over-year in September, down from an upwardly revised 1.9% in August but exceeding expectations of 1.6%. Core producer prices, excluding energy and food, saw a sharp increase from 2.6% to 2.8% year-on-year, surpassing expectations of 2.7%.
Preliminary estimates from the University of Michigan indicated that the U.S. consumer sentiment index fell to 68.9 in October 2024, down from a five-month high of 70.1 in September and missing forecasts of 70.8. Year-ahead inflation expectations rose slightly from 2.7% to 2.9%, while the five-year outlook dipped from 3.1% to 3%.
Joanne Hsu, Director of Surveys of Consumers, stated, “Consumers continue to express frustration over high prices. Still, long run business conditions lifted to its highest reading in six months, while current and expected personal finances both softened slightly”.
Despite these mixed economic signals, investors remained focused on the positive bank earnings and maintained an optimistic outlook towards the upcoming corporate earnings season.
Here are the top five performers on Friday for the S&P 500 and the Dow Jones:
S&P 500’s Top 5 Performers on Friday:
| Stock | Sector | Price | 1-day Return (%) |
|—|—|—|—|
| Uber Technologies, Inc. (UBER) | Industrials | 84.21 | 8.07% |
| Fastenal Company (FAST) | Industrials | 75.13 | 7.34% |
| Wells Fargo & Company (WFC) | Financials | 60.99 | 5.61% |
| WW. Grainger, Inc. (GWW) | Industrials | 1,079.38 | 5.29% |
| Bank of America Corporation (BAC) | Financials | 41.97 | 4.99% |
Dow’s Top 5 Performers on Friday:
| Stock | Sector | Price | 1-day Return (%) |
|—|—|—|—|
| JPMorgan Chase & Co. (JPM) | Financials | 221.99 | 4.30% |
| The Boeing Company (BA) | Industrials | 150.55 | 2.68% |
| The Goldman Sachs Group, Inc. (GS) | Financials | 513.51 | 1.94% |
| Intel Corporation (INTC) | Information Technology | 23.63 | 1.78% |
| American Express Company (AXP) | Financials | 274.73 | 1.58% |
