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U.S. stocks on Friday were mixed, as solid Q3 earnings from major banks were countered by weak consumer sentiment data and a surge in crude oil.
The Nasdaq Composite (COMP.IND) slipped 0.92% to 13,449.62 points in morning trade. JD.com (JD) was the top percentage loser on the tech-heavy index, after several analysts cut their revenue forecasts and lowered their price targets on the stock.
Dutch semiconductor companies NXP Semiconductors (NXPI) and ASML Holding (ASML) came under pressure amid Japanese firm Canon’s (OTCPK:CAJPY) (OTCPK:CAJFF) announcement that it had started selling advanced machines to create semiconductors.
The S&P 500 (SP500) was lower by 0.31% to 4,336.26 points, while the blue-chip Dow (DJI) was up 0.14% to 33,678.66 points.
The S&P (SP500) was on track for back-to-back weekly gains, however, as markets continued their recovery from a bruising September. The benchmark gauge was up 0.64% so far for the week, while the Dow (DJI) was up 0.14% and the Nasdaq (COMP.IND) was up 0.81%.
Of the 11 S&P sectors, six were in negative territory, led by heavyweight growth names Communication Services and Technology.
Energy topped the gainers, as WTI crude oil futures (CL1:COM) jumped +4% amid signs of an imminent ground invasion of Gaza by Israel, nearly a week after Islamist group Hamas launched a deadly attack on the country. TD Asset Management argued that the risks from a surge in oil prices in reaction to the Israel-Hamas war were limited.
Financials added 0.7%, while the sector’s accompanying Financial Select Sector SPDR ETF (XLF) climbed 0.6%, as the Q3 earnings season was kicked off by reports from JPMorgan (JPM), Citigroup (C) and Wells Fargo (WFC).
Bellwether JPM announced another quarter of record net interest income amid elevated interest rates. The lender also bumped up its full year net interest income guidance. Shares of the Jamie Dimon-led bank rose around 4%. Wells Fargo (WFC) also put in a strong net interest income performance, with shares adding ~4%. Citigroup (C) advanced +3% after delivering revenue growth in its five core units.
Bank of America (BAC) and Goldman Sachs (GS) will round out the major banks on Tuesday.
Earlier, the University of Michigan’s preliminary reading of consumer sentiment slipped in October, while year-ahead inflation expectations ticked up. The report comes after both producer and consumer inflation data came in hotter-than-anticipated this week.
“In addition to the continued uncertainty in the macro environment, current events likely weighed on consumers mindsets in early October, proving to be headwinds to sentiment,” Wells Fargo’s Tim Quinlan said.
“The cutoff for today’s preliminary survey results was October 11th, several days after the Israel-Gaza conflict began. Worry about this, as well as continued uncertainty around U.S. congress in both the vying for a new Speaker of the House and budget negotiations, leaves consumers little room to look for reprieve in the near term. Continued labor strikes and still-elevated prices are two more factors leaving little for households to be cheery about thus far this month,” Quinlan added.
Turning to the fixed-income markets, Treasury yields were lower after their big jump in the previous session. The longer-end 30-year yield (US30Y) was down 9 basis points to 4.78%, while the 10-year yield (US10Y) was down 8 basis points to 4.63%. The more rate-sensitive 2-year yield (US2Y) was down 2 basis points to 5.05%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.