Bank earnings pushed US indexes to record levels

Bank earnings pushed US indexes to record levels


Wall Street scored fresh record on Friday as earnings season kicked off. The S&P 500 index rose 0.6 percent, beating the 2,453.82 points record set on June 19. All sectors with an exception of financials finished in green zone. Real estate and technology stocks made gains of 1.1% and 0.9%, respectively. Meanwhile, Dow added 90 points to its value and also notched new records. The 30-stock index saw an increase of 0.6% to 21,637.74 points.

The Nasdaq Composite Index closed 38.03 points or 0.6%, higher at 6,312.47, extending for its five-day winning streak. The index finished near its record of 6,321.76 set on June 8. For the week, all major indexes posted solid gains which was led by a 2.6% rally for the Nasdaq. The S&P 500 posted a 1.4% gain and the Dow recorded a 1% climb.

Major stock groups overcame several obstacles and rebounded to record levels. One of them was technology sector, which showed signs of weakness at the end of the first half but at the same time it still is the best performing sector this year – with growth of over 20%.

Three investment banks – JP Morgan, Citigroup and Wells Fargo reported better than expected results for the second quarter.

Investors paid attention to disappointing data on retail sales and consumer prices in June. Retail sales in the US unexpectedly reported a decline in June for the second consecutive month, which could cool expectations for strong acceleration of economic growth in the second quarter. In addition, cheaper gas, airfare, new and second-hand cars and cell phone plans have kept consumer prices in the US unchanged in June.

Earlier this week, Federal Reserve Chairman Janet Yellen signaled that future increases in interest rates will be gradual.

“Economic surprises continue to tilt toward the downside in the world’s largest economy, suggesting that the Federal Reserve’s hawkish stance earlier in the year could once again prove ill-founded,” said Karl Schamotta, market strategist at Cambridge Global Payments.

“Market participants are increasingly convinced that the central bank’s ‘dot plot’ rate forecast will be adjusted downward, with the yield curve coming under pressure as investors fade the likelihood of rapid monetary tightening,” Schamotta said.

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Brayden Fortin is a American with numerous years of investment experience in the American Equity Market and in the Global Commodity Market. He has a B.Com degree from a well respected Canadian university and has experience working in the wealth management industry. He is interested in delving into numbers to analyze companies and markets. He won a couple of international strategy simulation competitions involving decision making through numerical analysis, and also scored in the top 50 on the Bloomberg Aptitude Test (out of nearly 200,000 test takers).