JPMorgan Chase and Wells Fargo both reported better-than-expected net interest income, signaling a positive outlook for the upcoming third-quarter earnings season. Encouraged by these positive results from major banks, the U.S. stock market reached unprecedented heights on Friday, creating optimism as the third-quarter earnings reports begin to roll in. With a busy schedule of corporate earnings next week, including TSMC’s conference that will provide insights into the semiconductor industry’s latest outlook, there’s clearly more room for growth in U.S. equities.
The S&P 500 index rose 0.6% on Friday, closing at 5,815.03, marking its first close above 5,800 points. The Dow Jones Industrial Average surged by 409 points, also closing at a record high of 42,863.86 points, while the Nasdaq composite increased by 0.3%. All three major U.S. indices posted gains of over 1% for the week, continuing a streak of five consecutive weeks in the green.
Leading the charge, TSMC’s ADR surged by 2.7%, helping the Philadelphia semiconductor index rise 0.8% on Friday, with weekly gains of 2.5% and 5.3%, respectively. Nvidia also contributed to the momentum, climbing 7.9% over the week and nearing its historical high set in late June.
Despite initial concerns that a potential interest rate cut by the Federal Reserve might weaken bank profits, the better-than-expected net interest income from JPMorgan and Wells Fargo further propelled bank stocks to their highest levels since April 2022.
Michael Landsberg, Chief Investment Officer at Landsberg Bennett Private Wealth Management, remarked, “We are anticipating a robust earnings season. Even among the large banks, credit card delinquency rates remain low, and a healthy economy should support banking performance.”
Next week, bank earnings will take center stage, allowing investors to gain further insights into the capital markets and consumer conditions. Bank of America, Goldman Sachs, and Morgan Stanley are next in line to announce their earnings.
In addition to the major banks, reports from American Express, Netflix, United Airlines, and P&G will help illuminate consumer conditions, which comprise two-thirds of the U.S. economy. Additionally, retail sales data for September will be released on Thursday. Last week’s strong employment report for September somewhat alleviated concerns over consumer spending, though lingering worries remain.
An Oppenheimer report noted that the S&P 500 typically sees a median increase of 2% during the first four weeks of the earnings reporting season.
Furthermore, ASML will report its results on Wednesday, and TSMC’s conference on Thursday will provide further insights into the semiconductor industry’s trends.
Art Hogan, Chief Market Strategist at B. Riley Wealth, stated, “Overall, most economic data has been positive, and we hope to see this confirmed in next week’s consumer earnings reports.”
