Wall Street Climbs on Earnings 07/12 09:46

Wall Street Climbs on Earnings 07/12 09:46

U.S. stock indexes are rising Friday following some mixed signals on big banks' profits and on inflation.

NEW YORK (AP) -- U.S. stock indexes are rising Friday following some mixed signals on big banks' profits and on inflation.

The S&P 500 was up 0.5% in morning trading and on track to close out its fifth winning week in the last six. The Dow Jones Industrial Average was up 158 points, or 0.4%, as of 10:15 a.m. Eastern time, and the Nasdaq composite was 0.7% higher.

Bank of New York Mellon climbed 4.4% for one of the market's bigger gains after it reported better profit for the spring than analysts expected. Fastenal, a distributor of fasteners, rose 4.3% after delivering profit for the latest quarter that met Wall Street's forecasts.

They helped offset a drop for Wells Fargo, which sank 6.4% even though the San Francisco-based bank reported stronger profit than analysts expected. It said a key underlying measure of profit fell from a year ago and that its net interest income could remain in the bottom half of the range it had forecast for the full year.

In the bond market, which has been home to some of Wall Street's strongest action this week, Treasury yields yo-yoed after the release of the latest update on inflation, which said prices rose more for wholesalers last month than economists expected. It's a letdown following Thursday's report that said inflation at the consumer level last month was better than expected.

But after a couple initial swings, Treasury yields calmed and remained lower than they were late Thursday.

"It's still going to take some time before we know whether yesterday's number or today's was the aberration," said Chris Larkin, managing director of trading and investing at E-Trade from Morgan Stanley.

Also helping to keep yields anchored was a report suggesting U.S. households aren't quite as fearful about inflation staying so high in the future. Over the coming year, U.S. consumers are forecasting inflation of 2.9%, according to preliminary data from the University of Michigan.

It's the second straight month such expectations have eased, which is a big deal to the Federal Reserve. The fear is that if U.S. consumers were expecting much higher inflation in the future, they could behave in ways that push it higher and create a self-fulfilling cycle.

After climbing as high as 4.23% following the wholesale inflation report's release, the 10-year Treasury yield settled back down to 4.19% after the report on consumer sentiment. That's down from 4.21% late Thursday.

The two-year yield, which moves more closely with expectations eased to 4.47% from 4.51% late Thursday.

Traders are banking on a 96% probability that inflation is slowing enough for the Federal Reserve to begin cutting its main interest rate in September, according to data from CME Group. Wall Street has been hoping for cuts to the Fed's main interest rate, which is sitting at its highest level in more than two decades.

Lower interest rates would release pressure that's built up on the economy because of how expensive it's become to borrow money to buy houses, cars, or anything on credit cards. Fed officials, though, have been saying they want to see "more good data" on inflation before making a move.

Of course, traders have a long history of being premature about forecasting cuts to rates. JPMorgan Chase CEO Jamie Dimon said Friday that inflation and interest rates may stay higher than the market expects because of the U.S. government's spiraling debt and other factors.

Easier interest rates would help all types of businesses, and smaller companies could see big benefits because of how much they borrow to grow. The smaller stocks in the Russell 2000 pulled decisively higher above their larger counterparts in the S&P 500 index on Thursday following the encouraging data on inflation data at the consumer level, and that continued on Friday.

The Russell 2000 jumped 1.7%, nearly triple the S&P 500's gain.

In stock markets abroad, Japan's Nikkei 225 gave back some of its recent record-breaking run and fell 2.4%, though it's still up more than 23% for the year so far.

Indexes were mixed across the rest of Asia and higher in much of Europe.

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