The Fed has already hiked its federal funds rate to a range of 5% to 5.25%, up from virtually zero early last year. That bolstered investors’ hopes that the Federal Reserve is close to feeling comfortable enough to halt its blistering campaign to raise interest rates. Two reports earlier this week showed that inflation continued to cool across the U.S. Wall Street nevertheless rallied hard this week and closed out its seventh winning week in the last nine because of rising optimism for the other major lever that sets stock prices: how much investors are willing to pay for each $1 of corporate profits. Such expectations are key for financial markets, because one of the biggest factors that set a stock’s price is how much profit a company produces. If they’re right, it would also mark a third straight quarter where profits sank. Analysts are forecasting the worst drop in earnings per share for S&P 500 companies since the spring of 2020. The earnings reporting season is just getting underway, and Wall Street’s expectations are low. Helping to drag down Wall Street was State Street, which dropped 12.1% after reporting slightly weaker revenue than expected for the latest quarter, though its profit topped forecasts. Wells Fargo likewise swung to a drop of 0.3% from an earlier gain after reporting stronger profit for the second quarter than expected. It had been up more in the morning, but it faded through the day like the broader market. JPMorgan Chase rose 0.6% after it said its profit during the spring grew by more than expected thanks in part to its acquisition of the troubled First Republic Bank. It also raised the bottom end of its forecast for earnings for the full year. Insurance giant UnitedHealth Group rallied 7.2% after it said profit growth during the spring was better than feared. The S&P 500 slipped 4.62, or 0.1%, to 4,505.42 to edge back from its highest closing level since April 2022. NEW YORK (AP) - Wall Street’s latest winning week closed with a mixed finish on Friday following stronger profit reports than expected from several big U.S.
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