US open: Wall Street begins to recover from two days of heavy losses

Wall Street trading began with some solid gains on Friday following two days of heavy losses, as banking heavyweights Wells Fargo, JPMorgan Chase and Citigroup kicked off the earnings season.

As of 1540 BST, the Dow Jones was up 00.92% at 25,283.60, while the S&P 500 was 1.33% higher at 2,764.74 and the Nasdaq was trading 2.13% higher at 7,485.37.

SpreadEx analyst Connor Campbell, said: "The Dow Jones got some of its mojo back on Friday, at the moment intent on ending a wild week in (mild) recovery mode."

Much like European indices, the Dow got off to a positive start on Friday, slightly recovering from two days of sharp losses, sparked in part by worries about rising US interest rates and the trade conflict between the US and China; however, as Campbell pointed out, the extent of that positivity remained to be seen, with the US index veering between gains of 200 and 400 points.

"That effectively left the Dow in the middle of Thursday's wide trading range, one that saw the index hit both 25650 and 24900. At the very least, it appears the index has calmed down (though there is a way to go yet before the session is over)."

Meanwhile, Commerzbank's chief economist Peter Dixon said one of the biggest single concerns is that the surge in US markets has been overly reliant on the so-called FAANG stocks - Facebook, Amazon, Apple, Netflix and Google.

"A market which is so dependent on one sector is clearly vulnerable to a shift in sentiment which could result from factors as diverse as legal issues (e.g. privacy laws) or a failed product offering," he said. "A final point to bear in mind is that US equities have been turbocharged by the tax cuts introduced at the start of the year, which has given a boost to earnings but which is unlikely to be sustainable."

Things were starting to get busy on the corporate front, with shares of JPMorgan dipping 0.25% at the open despite its third-quarter results beating analysts' estimates, with revenue of $27.8bn compared to expectations of $27.5bn and earnings per share of $2.34 versus expectations of $2.25.

Wells Fargo dropped 0.97% even though it posted a 32% jump in third-quarter profit on Friday, helped in part by lower expenses and financial giant Citigroup picked up 0.85% after it revealed a mixed performance from the latest three-month stretch.

GE shares fell 1.57% after the group delayed its earnings report by five days - the fourth-straight day of losses for the multinational.

On the macro front, the cost of goods purchased from outside the US advanced a tad slower than expected last month.

According to the Bureau of Labor Statistics, US import prices rose 0.5% month-on-month in September, edging past expectations of a 0.3% increase.

However, year-on-year, they were up by 3.5%, short of the 3.7% analysts had anticipated.

Fuel import costs climbed by 3.8% versus the prior month, while non-fuel import prices were flat.

Export prices, on the other hand, were flat month-on-month.

Elsewhere, consumer sentiment in the US deteriorated in October, according to a preliminary reading from the University of Michigan.

The consumer sentiment index ticked down to 99.0 from 100.1 in September and 100.7 in October last year, missing expectations for a reading of 100.4.

Meanwhile, the current economic conditions index fell to 114.4 this month from 115.2 in September and 116.5 last October.

The index of consumer expectations declined to 89.1 in October from readings of 90.5 last month and in October 2017.

Survey of Consumers chief economist Richard Curtin said that even though consumer sentiment slipped, it remained at quite favourable levels and just above the average reading of 98.5 for 2018.