PPI Rises – US Market Wrap

Stocks finished higher as the latest economic data reinforced bets the Federal Reserve will cut rates in September.

In the last 30 minutes of Wall Street trading, the S&P 500 pared its advance. Banks got hit at the start of the US earnings season, with results from Wells Fargo, JPMorgan and Citigroup failing to fuel industry momentum. Tech megacaps rebounded as a group, though Meta Platforms slid almost 3%. Smaller firms kept climbing.

Equity traders shrugged past a dismal consumer sentiment report to focus on the possibility of rate reduction, which might ultimately help corporate America. Data also showed that producer prices rose slightly faster than expected, but the categories used to generate the Fed’s preferred inflation indicator, the personal consumption expenditures price index, were not as terrible.

The S&P 500 rose to 5,615 – notching a 10th weekly gain in 12 weeks. Nvidia led gains in big tech. Tesla rallied a day after tumbling over 8%. The Russell 2000 of small caps saw its best week since November.

Wells Fargo fell 6% after warning it will not be able to reduce costs as quickly as expected. Despite reporting a record profit, JPMorgan underperformed on a few key criteria, including net interest income. Citigroup predicted that costs for the year will be at the upper end of the previously given range. Bank of New York Mellon Corp. rose on better-than-expected net interest income.

As traders recalibrated their bets on rate cuts. Treasuries wiped out their 2024 losses this week. US 10-year yields declined three basis points to 4.18% on Friday.