S&P 500 Marks Best Week Since August; Dow, Nasdaq Rise; Oracle, Nvidia, Micron, Zions Bancorp, More Movers; Bank Loan Fears
The stock market on Friday shook off worries about artificial intelligence valuations, regional banks, and trade to cap off its best week since August.
The Dow Jones Industrial Average rose 238 points, or 0.5%. The S&P 500 gained 0.5%. The Nasdaq Composite was up 0.5%. The S&P marked its best weekly performance since August despite a spike in volatility.
The yield on the 10-year Treasury note rose to 4.01%, after settling below the key 4% level on Thursday.
Stocks got a boost prior to the market’s open after President Donald Trump suggested a scheduled meeting with China’s Xi Jinping later this month was still on track despite recent tensions. Trump also called the tariff situation “not sustainable.”
The CBOE Volatility Index, or VIX, retreated on Friday but was still above the 20 level that is viewed as normal. The VIX had held below 20 from Aug. 2 through this past Friday.
“While we are prepared for a more volatile leg of the bull market, we did not think the near-term culprit would be credit,” writes Citi’s Scott Chronert. “Good bank results have been overshadowed by defaults in private and bank loan markets.”
Regional bank stocks bounced back on Friday after falling sharply on Thursday.
“It often takes things like this little ‘credit kerfuffle’ to shake some of that froth out of the market,” David Donabedian, co-chief investment officer of CIBC Private Wealth, told Barron’s. “While there’s probably been a little too much hyperbole about all the ‘cockroaches’ and so forth, in a way, it’s kind of a healthy thing. It’s a reminder there is always risk in the financial markets, and that can shake out some of the froth.”
Wall Street will turn its attention to the next big wave of earnings reports in the week ahead, including big names like Coca-Cola, Netflix, and General Motors.
Though it had been delayed by the shutdown, the Bureau of Labor Statistics is also slated to release the consumer price index reading for September on Oct. 24. The Federal Reserve is widely expected to opt for another interest-rate cut later this month, but the CPI could help bring into focus the path for the rest of the year.
