U.S. Stocks Regain Ground After Seeing Initial Weakness

After coming under pressure at the start of trading on Friday, stocks have regained ground over the course of the morning. The major averages have climbed well off their early lows and are now lingering near the unchanged line.

Currently, the major averages are narrowly mixed. While the Dow is up by 11.78 points or less than a tenth of a percent at 34,201.75, the Nasdaq is down 9.04 points or 0.1 percent at 10,992.06 and the S&P 500 is down 8.04 points or 0.2 percent at 3,975.13.

The initial weakness on Wall Street came as traders looked to cash in on some the recent strength in the markets amid a negative reaction to earnings news from several big-name financial companies.

Shares of JPMorgan Chase (JPM) slumped early in the session and is currently modestly lower even though the company reported fourth quarter results that beat analyst estimates on both the top and bottom lines.

JPMorgan also announced an increase in reserves for credit losses, as the firm’s macroeconomic outlook now reflects a “mild recession in the central case.”

Financial giants Citigroup (C), Wells Fargo (WFC) and Bank of America (BAC) have also moved to the downside after reporting their fourth quarter results.

Selling pressure waned shortly after the start of trading, however, with upbeat consumer sentiment and inflation expectations helping to offset the negative sentiment.

The University of Michigan said its consumer sentiment index jumped to 64.6 in January from 59.7 in December. Economists had expected the index to inch up to 60.5.

With the much bigger than expected increase, the consumer sentiment index reached its highest level since hitting 65.2 in April 2022.

“Consumer sentiment remained low from a historical perspective but continued lifting for the second consecutive month, rising 8% above December and reaching about 4% below a year ago,” said Surveys of Consumers Director Joanne Hsu.

The report also showed a continued decrease in one-year inflation expectations, which tumbled to 4.0 percent in January from 4.4 percent in December, falling for the fourth straight month.

“The current reading is the lowest since April 2021 but remains well above the 2.3-3.0% range seen in the two years prior to the pandemic,” said Hsu.

Despite the recovery attempt by the broader markets, notable weakness remains visible among banking stocks, with the KBW Bank Index off its lows but still down by 1.4 percent.

Natural gas and software stocks also continue to see some weakness on the day, while gold stocks have moved higher along with the price of the precious metal.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday, although Japan’s Nikkei 225 Index bucked the uptrend and tumbled by 1.3 percent. China’s Shanghai Composite Index and Hong Kong’s Hang Seng Index both jumped by 1.0 percent.

The major European markets have also moved to the upside on the day. While the German DAX Index is up by 0.4 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are up by 0.8 percent and 0.9 percent, respectively.

In the bond market, treasuries have bounced back near the unchanged line after seeing initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 3.441 percent.

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