Stocks ended mixed on Friday, with the Dow Jones Industrial Average taking a tumble, as Wall Street reacted to earnings reports and inflation data.
The Dow lost 118 points, or 0.31%, the S&P 500 gained 0.08%, while the tech-heavy Nasdaq edged up 0.2%.
Citigroup (C) -), gained 1% after the third-largest bank in the U.S. said it is planning to simplify its organization, which includes dropping 20,000 employees in the “medium term.”
Earlier in the day the financial services company said it was paying $1.7 billion to the FDIC and taking another $2 billion in charges linked to markets in South America and Russia.
Dow component UnitedHealth Group (UNH) -) lost 3.4% after posting stronger-than-expected fourth-quarter earnings Friday as its Optum benefits division continued to power its top and bottom lines while offsetting a modest increase in medical costs.
The producer price index, a gauge of wholesale prices, fell 0.1% for December, softer than the consensus forecast for a 0.1% increase.
Jeffrey Roach, Chief Economist for LPL Financial said that after the data release, yields on the 2-year treasury reached the lowest since mid-May 2023 as markets expect overall borrowing costs to ease throughout 2024.
"Markets are shrugging off yesterday’s CPI report since the underlying inflation trend is improving and the Fed can legitimately consider cutting rates this year," he said. "The inflation pipeline is clearing and consumer prices will gradually get to the Fed’s 2% target. Investors must be patient during the slow-moving disinflationary process."
--Rob Lenihan
U.S. stocks pared earlier gains Friday, with the the S&P 500 to a fresh 52-week higher, while oil prices tumbled as investors picked-through a host of blue-chip earnings that kicked-off fourth quarter reporting season.
Updated at 10:55 AM EST
New highs, then lower
Stocks hit a fresh one-year high despite some of the drag on stocks from mixed bank earnings and the pullback in airline stocks tied to a muted profit outlook from Delta Air Lines (DAL) -).
The S&P 500 was last marked 9 points lower, or 0.19% on the session, after hitting a 52-week high of 4,802.40 earlier in the session while a slump in UnitedHealth shares added to the Dow's 225 point decline.
Updated at 9:35 AM EST
Stocks higher
A softer-than-expected reading for December factory gate inflation, which could signal both muted CPI forecasts and wider corporate profit margins, has stocks on the move in early Friday dealing.
The S&P 500 rose 14 points, or 0.3%, while the Dow added 100 points and the Nasdaq 30 points.
Benchmark 10-year Treasury yields, meanwhile, fell to a one-month low of 3.948% while 2-year yields eased to 4.15%.
Updated at 8:47 AM EST
Factory gate deflation
Producer prices were flat in December, the Commerce Department reported Friday, with core pressures rising just 0.2% on the month and 1.8% from last year.
Key components of the PPI reading feed into the Fed's preferred inflation gauge, the PCE Price Index, and could indicate softer reading when the data is published later this month.
Stocks are paring their earlier declines, with the S&P 500 called 3 points lower and the Dow expected to fall around 115 points. The Nasdaq is called 15 points to the downside.
Updated at 7:52 AM EST
Tesla red thanks to Red
Tesla (TSLA) -) shares slumped lower in early Friday trading after it confirmed that attacks on cargo ships in the Red Sea, lead by Iran-backed Houthi militants in Yemen, will likely trigger a parts shortage that will shut its Berlin factory for at least a week.
Related: Tesla slumps as Red Sea attacks force suspension at Berlin factory
Updated at 7:10 AM EST
Messy banks
Bank earnings are coming in thick and fast, with JPMorgan (JPM) -) missing Street forecasts on its bottom line, thanks in part to a $3 billion FDIC payout for the regional bank rescues. Its record net interest income, however, is giving share a boost, as is its 2024 outlook for expenses.
Citigroup (C) -), meanwhile slipped lower after paying $1.7 billion to the FDIC and taking another $2 billion in charges linked to markets in South America and Russia.
Wells Fargo (WFC) -) was also lower as the specter of its asset cap, linked to its fake accounts scandal, will likely act as a break on near-term growth even as it posted stronger-than-expected fourth quarter profits of 86 cents per share.
Related: JP Morgan earnings miss forecasts on $3 billion FDIC bank rescue payout
Stock Market Today
JPMorgan leads a parade of big-bank earnings, including Citigroup and Wels Fargo, with UnitedHealth and Delta Airlines also reporting December-quarter results before the opening bell.
UnitedHealth (UNH) -) got the ball rolling with a stronger-than-expected earnings report that included a record $94.4 billion in overall revenue.
Shares in the Dow component declined, however, amid another move higher in its medical-cost ratio, a key component of profitability.
Analysts are looking for collective S&P 500 profits to rise 5.2% from a year earlier to a share-weighted $457.2 billion, with earnings over the whole of 2024 expected to rise by around 11.1% from the previous year.
That outlook is likely to be crucial for markets to extend their late-2023 rally over the coming months. That's because Thursday's inflation report suggested that stubborn price pressures are likely to elongate the Federal Reserve's effort to bring core inflation closer to its preferred 2% target.
A "higher for longer" approach on rates from the Fed is likely to keep Treasury yields elevated over the near term, adding to pressure on stocks that will only abate if fourth-quarter earnings season and the outlook for first-quarter profit meet or exceed Wall Street forecasts.
Away from equities, global oil prices surged higher in overnight trading after the U.S. and the U.K. carried out coordinated military attacks on Iran-backed Houthi rebels in Yemen following a spate of attacks on cargo ships traveling through the Red Sea and into the Suez Canal.
"These targeted strikes are a clear message that the United States and our partners will not tolerate attacks on our personnel or allow hostile actors to imperil freedom of navigation," U.S. President Joe Biden said in a statement.
Brent crude contracts for March delivery, the global pricing benchmark, were last seen trading $3.16 higher heading into the New York session and changing hands at $80.60 per barrel.
WTI contracts for February delivery, which are more tightly linked to U.S. gasoline prices, jumped $3.05 to $75.07 per barrel.
On Wall Street, futures contacts tied to the S&P 500, which nudged into positive territory for the year on Thursday, are indicating a 6-point opening-bell decline while those linked to the Dow Jones Industrial Average are called 45 points lower.
The tech-focused Nasdaq, which is still down 0.27% for the year, is set to open 48 points lower.
In overseas markets, European stocks were trending higher, with the Stoxx 600 rising 0.8% in early Frankfurt trading, following dovish remarks on inflation from European Central Bank President Christine Lagarde late Thursday.
Speaking on French television, Lagarde said the "hardest part is behind us" with respect to the post-covid inflation surge, adding that "if we are certain that inflation will indeed be at 2%, at that point rates will start to go down."
Overnight in Asia, the Nikkei 225 in Japan extended its recent surge to close at its fourth consecutive 34-year high of 35,577.11 points.
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