US close: Markets rise despite bank sell-off as rate-cut hopes increase

US stocks finished higher with the Dow topping the 40,000 mark for the first time in nearly two months despite a gloomy start to bank earnings season, as expectations of an interest-rate cut in September continued to climb.

Investors were largely shrugging off an upside surprise to June's producer price index and instead chose to focus on Thursday's sharper-than-expected slowdown in consumer-price inflation to its joint lowest level in more than three years.

All three main Wall Street benchmarks gained 0.6% on Friday, with the Dow in particular settling at 40,000.90, its highest closing level since 17 May.

In economic data, the US producer price index rose by 2.6% in June, up from 2.6% the month before and surprising economists who expected a slowdown to 2.3%.

"Producer prices at the headline rose slightly more than expected in June, but more encouragingly core prices, which strip out volatile components of the index, were unchanged. We expect lower oil prices and ongoing deflation at factory gates in China to help keep a lid on goods prices," said Matthew Martin, US economist at Oxford Economics.

"With officials more attentive to downside risks to the labor market of restrictive monetary policy, we expect the central bank to deliver the first rate cut in September followed by a second in December."

In other news, the University of Michigan's consumer sentiment index showed its fourth straight monthly decline, dropping from 68.2 in June to 66 in July. The preliminary print marked the lowest reading since November and was well below forecasts of 68.5.

Banks disappoint

Citigroup, Wells Fargo and JPMorgan Chase & Co all closed in the red after the release of their second-quarter results.

Citigroup posted higher quarterly revenues and profit, alongside an increased dividend, but shares dropped 2% after net credit losses jumped 52%.

Wells Fargo sank 6% after posting a 9% decline in net interest income to $11.92bn, below the $12.12bn expected on the Street, primarily due to the impact of higher interest rates on funding costs.

JP Morgan fell 1% despite posting big increases on both its top and bottom lines, after boss Jamie Dimon continued to call attention to the potential risks on the horizon.

"The question for investors now is whether this sell-off is part of the rotation out of the higher performing stocks towards value investing, or is there something within these results that are unsettling investors," said Kathleen Brooks, research director at XTB.

AT&T fell after revealing that the call and text logs of its customers were breached between May and October 2022. The company said it was working with law enforcement to arrest those involved, and understands that "at least one person has been apprehended".

Dow Jones - Risers

Amgen Inc. (AMGN) $330.90 3.16%
International Business Machines Corporation (CDI) (IBM) $182.83 2.53%
Cisco Systems Inc. (CSCO) $47.38 1.73%
Home Depot Inc. (HD) $359.77 1.69%
Unitedhealth Group Inc. (UNH) $511.53 1.42%
Caterpillar Inc. (CAT) $335.59 1.35%
Travelers Company Inc. (TRV) $211.60 1.27%
Visa Inc. (V) $265.74 1.22%
Salesforce.Com Inc. (CRM) $253.97 1.13%
Dow Chemical Co. (DOW) $52.91 0.95%

Dow Jones - Fallers

Microsoft Corp. (MSFT) $453.55 -2.18%
JP Morgan Chase & Co. (JPM) $204.94 -1.21%
Merck & Co. Inc. (MRK) $127.76 -0.94%
Boeing Co. (BA) $182.31 -0.87%
Walmart Inc. (WMT) $69.24 -0.80%
McDonald's Corp. (MCD) $253.90 -0.35%
Apple Inc. (AAPL) $230.54 -0.29%
Intel Corp. (INTC) $34.49 -0.29%
American Express Co. (AXP) $238.63 -0.05%
Dowdupont Inc. (DWDP) $0.00 0.00%

S&P 500 - Risers

Nektar Therapeutics (NKTR) $1.42 6.37%
Bank Of New York Mellon Corp. (BK) $64.69 5.24%
Charter Communications Inc. (CHTR) $311.04 5.11%
Sba Communications Corp. (SBAC) $212.83 4.66%
Accenture Plc (ACN) $310.63 4.24%
Ford Motor Co. (F) $14.03 4.16%
Cognizant Technology Solutions Corp. (CTSH) $71.53 4.15%
Dollar Tree Inc (DLTR) $107.36 3.98%
Boston Properties Inc. (BXP) $67.76 3.88%
Apache Corp. (APA) $29.97 3.81%

S&P 500 - Fallers

Meta Platforms Inc. (META) $498.87 -6.39%
Wells Fargo & Co. (WFC) $56.54 -6.02%
Align Technology Inc. (ALGN) $242.65 -4.98%
Costco Wholesale Corp. (COST) $842.90 -4.05%
Applied Materials Inc. (AMAT) $243.40 -3.76%
Nvidia Corp. (NVDA) $129.24 -3.64%
Lam Research Corp. (LRCX) $1,069.82 -3.52%
NetApp Inc. (NTAP) $130.17 -3.38%
Delta Airlines Inc. (DAL) $43.62 -3.05%
Netflix Inc. (NFLX) $647.60 -3.04%

Nasdaq 100 - Risers

Qurate Retail Inc. (QRTEA) $0.77 9.88%
Charter Communications Inc. (CHTR) $311.04 5.11%
Cognizant Technology Solutions Corp. (CTSH) $71.53 4.15%
Dollar Tree Inc (DLTR) $107.36 3.98%
Hasbro Inc (HAS) $59.74 3.77%
Ulta Salon, Cosmetics & Fragrance Inc. (ULTA) $412.94 3.68%
Incyte Corp. (INCY) $63.66 3.23%
J.B. Hunt Transport Services Inc. (JBHT) $166.16 3.20%
Amgen Inc. (AMGN) $330.90 3.16%
Starbucks Corp. (SBUX) $74.83 2.89%

Nasdaq 100 - Fallers

Meta Platforms Inc. (META) $498.87 -6.39%
Tesla Inc (TSLA) $248.23 -5.89%
Align Technology Inc. (ALGN) $242.65 -4.98%
Costco Wholesale Corp. (COST) $842.90 -4.05%
Applied Materials Inc. (AMAT) $243.40 -3.76%
Nvidia Corp. (NVDA) $129.24 -3.64%
Lam Research Corp. (LRCX) $1,069.82 -3.52%
Netflix Inc. (NFLX) $647.60 -3.04%
KLA-Tencor Corp. (KLAC) $857.72 -2.75%
Alphabet Inc. Class A (GOOGL) $185.07 -2.64%