Stocks are seeing upward momentum, oil prices are rising, and bond yields are easing in the current dynamics of Wall Street. The S&P 500 is up 0.3% on Friday, poised to reach a record high as earnings season begins with varied results from Delta Air Lines, JPMorgan Chase, and Wells Fargo. The Dow is 78 points higher, and the Nasdaq composite is up 0.2%. Crude oil prices surged due to concerns about potential supply disruptions, while bond yields declined following a report revealing weaker-than-expected inflation at the U.S. wholesale level. This has solidified expectations for future rate cuts by the Federal Reserve.
Before the opening bell on Friday, Wall Street slightly dipped, and oil prices rose following military actions by the U.S. and British forces in Yemen. Futures for the S&P 500 lost 0.3%, and futures for the Dow Jones Industrial Average slid 0.5%. Oil prices increased amid fears of the Israel-Palestinian conflict expanding into a broader conflict in the oil-rich Middle East.
Early on Friday, a barrel of benchmark U.S. crude rose by $2.41 to $74.43, a 3.4% jump, following a $0.65 increase on Thursday. Brent crude, the international standard, climbed by $2.45 to $79.86 per barrel.
Corporate earnings took the spotlight with high-profile companies reporting Q4 2023 results. Delta Air Lines shares fell 5.8% despite reporting record sales and doubled profits. The market reacted cautiously to the company’s per-share profit outlook for 2024. JPMorgan Chase, Bank of America, and Citigroup all reported a decline in profits for the last quarter due to the lingering effects of higher interest rates and last year’s banking crisis.
In Europe, Germany’s DAX rose 0.6%, the CAC40 in Paris gained 0.7%, and Britain’s FTSE 100 climbed 0.7%. Tokyo’s Nikkei 225 saw a 1.5% gain, reaching levels not seen since 1990, while Taiwan’s Taiex declined 0.2% ahead of crucial presidential and legislative elections.
China reported a slight increase in exports and imports for December, signaling an uneven economic recovery. Consumer prices fell 0.3%, marking the third consecutive monthly decline, and the producer price index fell 2.7% for the 15th straight month.
Despite strong expectations for a significant interest rate cut by the Federal Reserve in 2024 due to a perceived cooldown in inflation, the latest inflation report showed a 3.4% increase in U.S. consumer prices in December compared to a year earlier. This accelerated from November’s 3.1% rate, prompting questions about the timing of rate cuts.
The bond market experienced fluctuations in Treasury yields, with the 10-year Treasury yield holding steady at 3.96% early on Friday, down from over 5% in October.
In currency markets, the U.S. dollar weakened against the Japanese yen, reaching 144.83, down from 145.28, while the euro slightly retraced to $1.0967 from $1.0971.
Thursday saw Wall Street wavering following the inflation update, raising uncertainties about the Federal Reserve’s potential interest rate cuts. The S&P 500 slipped 0.1%, the Dow rose less than 0.1%, and the Nasdaq composite edged up by less than 0.1%.
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