Dow Rises More Than 100 Points on Friday, Boosted By Strong Earnings

The Dow Jones Industrial Average rose Friday as strong earnings results from some of the biggest banks and companies kicked off earnings season.

Wall Street is coming off its fourth consecutive day of gains, with the Nasdaq and S&P 500 reaching their highest levels since April 2022.

JPMorgan Chase rose more than 2% in the premarket after posting better-than-expected earnings. The bank was boosted by higher interest rates and rising interest income. Wells Fargo also rose more than 3% in the premarket on the back of better-than-expected earnings.

UnitedHealth shares rose 3% after the insurance giant reported better-than-expected earnings and revenue. The company also raised the lower end of its full-year earnings guidance.

Expectations for this season are downbeat, with analysts forecasting a roughly 7% year-over-year drop in S&P 500 earnings, according to FactSet. That would mark the worst earnings season since the second quarter of 2020, when S&P 500 profits dropped 31.6%.

U.S. import prices fell 0.2% in June, the Bureau of Labor Statistics said on Friday. This marked the fifth month in 2023 import prices have declined, building upon earlier economic data from this week that came in cooler than expected.

The latest producer price index report showed inflation rose less than anticipated and built on trader optimism from the June consumer price index data, which came out Wednesday. Investors are now considering whether a strong economy illustrated by the recent data could push stocks higher by the end of the year.

“Most stock and bond index prices rose today as economic data indicates inflation has fallen quickly and the labor market remains strong,” Bill Merz, senior investment director at U.S. Bank Wealth Management. “Optimism that inflation will continue to fall prompted investors to bid up stocks as we await second-quarter earnings results. Investors also bid up bond prices as investors now anticipate only one more rate hike from the Federal Reserve before they begin cutting rates in early 2024 based on interest rate pricing.”

Indeed, the second half of the year could still be a strong one.

“Regardless of how much volatility we end up seeing, given the year-to-date strength and the macroeconomic challenges, we’d expect the calls for second-half underperformance to get even louder,” said Baird’s Ross Mayfield. “Amid the noise, just remember that a strong start to the year is a bullish signpost – not a bearish one – and has preceded solid second half performance far more often than not.”

On a weekly basis, the three major averages are well on their way to gains. The S&P 500 is up 2.5% on the week, while the Dow is up 1.9%. The Nasdaq Composite is the outperformer, leaping 3.5% and on pace for its best week since March 17.