Stocks Rally Ahead of Bank Earnings: Wells Fargo, JP Morgan, and Citi Group to Report
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US bank stocks reported mixed earnings on Friday, providing indications of how much credit conditions have tightened as a result of the banking sector turmoil events of mid-March. Wells Fargo, JP Morgan, and Citi Group reported before the opening of the US equity markets on Friday, April 14, 2023.
Despite this uncertainty, US stocks rallied across the board on Thursday, led by the tech sector, and Ethereum (ETH-USD) crossed the $2,000 mark for the first time this year. The S&P 500 was up 1.33%, the Dow Jones Industrial Average rose by 1.14%, and the tech-heavy Nasdaq Composite gained 1.99%. The small-cap Russell 2000 was also higher by more than 1.3%, while gold prices rose 1.4% to trade as high as $2,050 an ounce. Bitcoin (BTC-USD) gained 1.3% to trade back above $30,000.
Thursday’s rally in Ethereum was attributed to the successful rollout of another upgrade to the Ethereum blockchain. Crypto-exposed stocks, including Coinbase (COIN), Block (SQ), and MicroStrategy (MSTR), were all higher on Thursday.
On the economic data front, the March read on producer prices showed some additional moderation in inflation pressures last month, which was taken by investors as a potential sign that the Federal Reserve may be closer to ending its rate-hiking campaign sooner than expected. Labor market data also suggested that the job market continues to soften, with initial filings for unemployment insurance totaling 239,000 for the week ended April 8, the highest since January 2022, according to the government’s latest data.
Despite the upbeat market sentiment on Thursday, stocks fell on Wednesday after the minutes from the Federal Reserve’s latest policy meeting showed some officials forecasting the economy tipping into recession later in 2023. However, the minutes ultimately revealed that Fed officials were largely convinced that the banking system would remain stable after multiple banks failed last month, likely keeping the central bank on track to raise interest rates again next month.
The lag between hiking and showing up in economic data is unknown, and while inflation appears to be on the wane, the jobs market is holding up. Equity bulls are foreseeing an end to Fed rate hikes, and the bank reports on Friday could well add further fuel to the fire.
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- Smialek J. Inflation Shows Signs of Cooling as Fed Weighs Next Move. The New York Times. https://www.nytimes.com/live/2023/04/12/business/cpi-inflation-fed. Published April 12, 2023. Accessed April 14, 2023.
- Daily IB. Cryptocurrency News: Ethereum Bolts Above $2,000; Warren Buffett Still Thinks This About BTC. Investor’s Business Daily. Published April 13, 2023. Accessed April 14, 2023. https://www.investors.com/news/cryptocurrency-prices-news/