U.S. Stocks Show Significant Turnaround After Early Weakness

(RTTNews) - Stocks showed a significant turnaround over the course of the trading session on Friday, recovering from initial weakness to close mostly higher. The major averages climbed well off their early lows to end the day firmly positive.

The major averages showed a notable move to the upside in the final hour of trading. The Dow rose 112.64 points or 0.3 percent to 34,302.61, the Nasdaq advanced 78.05 points or 0.7 percent to 11,079.16 and the S&P 500 climbed 15.92 points or 0.4 percent to 3,999.09.

The gains on the day extended a recent upward trend, helping the major averages moved sharply higher for the week. The Nasdaq surged by 4.8 percent, while the S&P 500 and the Dow jumped by 2.7 percent and 2.0 percent, respectively.

The initial weakness on Wall Street came as traders looked to cash in on some the recent strength in the markets amid a negative reaction to earnings news from several big-name financial companies.

Shares of JPMorgan Chase (JPM) slumped early in the session even though the company reported fourth quarter results that beat analyst estimates on both the top and bottom lines.

JPMorgan also announced an increase in reserves for credit losses, as the firm's macroeconomic outlook now reflects a "mild recession in the central case."

However, shares of JPMorgan showed a notable turnaround over the course of the session, surging up by 2.5 percent.

Financial giants Citigroup (C), Wells Fargo (WFC) and Bank of America (BAC) also rebounded from initial weakness after reporting their fourth quarter results.

The recovery on Wall Street partly came as upbeat consumer sentiment and inflation expectations data helped offset the early negative sentiment.

The University of Michigan said its consumer sentiment index jumped to 64.6 in January from 59.7 in December. Economists had expected the index to inch up to 60.5.

With the much bigger than expected increase, the consumer sentiment index reached its highest level since hitting 65.2 in April 2022.

"Consumer sentiment remained low from a historical perspective but continued lifting for the second consecutive month, rising 8% above December and reaching about 4% below a year ago," said Surveys of Consumers Director Joanne Hsu.

The report also showed a continued decrease in one-year inflation expectations, which tumbled to 4.0 percent in January from 4.4 percent in December, falling for the fourth straight month.

"The current reading is the lowest since April 2021 but remains well above the 2.3-3.0% range seen in the two years prior to the pandemic," said Hsu.

Sector News

Gold stocks moved significantly higher over the course of the session, driving the NYSE Arca Gold Bugs Index up by 1.3 percent to its best closing level in seven months.

The strength among gold stocks came amid a sharp increase by the price of the precious metal, with gold for February delivery jumping $22.90 to $1,921.70 an ounce.

Considerable strength also emerged among retail stocks, as reflected by the 1.2 percent gain posted by the Dow Jones U.S. Retail Index.

Oil service, tobacco and brokerage stocks also saw some strength on the day, although most of the major sectors showed only modest moves.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday, although Japan's Nikkei 225 Index bucked the uptrend and tumbled by 1.3 percent. China's Shanghai Composite Index and Hong Kong's Hang Seng Index both jumped by 1.0 percent.

The major European markets also moved to the upside on the day. While the German DAX Index inched up by 0.2 percent, the U.K.'s FTSE 100 Index and the French CAC 40 Index climbed by 0.6 percent and 0.7 percent, respectively.

In the bond market, treasuries fluctuated early in the session before sliding firmly into negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.2 basis points to 3.511 percent.

Looking Ahead

Earnings season will start to pick up steam next week, with Goldman Sachs (GS), Morgan Stanley (MS), United Airlines (UAL), Procter & Gamble (PG) and Netflix (NFLX) among the companies due to report their quarterly results.

Traders are also likely to keep an eye on reports on producer prices, retail sales, industrial production, housing starts and existing home sales.