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US markets appeared to rebound Friday after a fright mid-week, including a discordant two-day loss of nearly 1,400 points for the Dow Jones industrial average. (Richard Drew / AP)
US markets appeared to rebound Friday after a fright mid-week, including a discordant two-day loss of nearly 1,400 points for the Dow Jones industrial average. Friday's recovery was fueled by solid third quarter results from the country's major banks.
After a frank sale, sparked by concern over rising interest rates, tensions over the trade war with China and a dramatic drop in the technology sector, Friday began to rise, after JPMorgan Chase, Wells Fargo and Citigroup all announced earnings growth. Their performance seemed to reassure investors.
By early afternoon, the Dow Jones industrial average had risen by about 0.6%, or 100 points. The Standard & Poor's 500-stock index rose 0.7%. The Nasdaq, technophile, recorded a gain of 1.4%.
Despite the contagious panic of the week, foreign markets also rebounded Friday. The Stoxx Europe 600 was up 0.3%. Japan's Nikkei Stock Average gained 0.5% and Hong Kong's Hang Seng rose 2.1%.
[[[[Meet the guy who is happy about wild swings on the stock market]
Similarly, consumer technology companies have recovered, with shares of Netflix having risen more than 5% and those of Amazon nearly 3% after suffering heavy losses earlier in the week.
Lisa Shalett, head of wealth management investment resources at Morgan Stanley, said there was no cause for alarm and that the week's losses were in the realm of the ordinary. But she urged investors to trust their instincts.
"This is one of those sales that are not scary because, until now, this is playing with the manual," said Shalett. "The market redefines the risk very rationally. But we are concerned about the outlook for the coming years and we are positioning the portfolios very cautiously. "
After the Dow Jones lost 832 points Wednesday, one of the worst sales since February, President Trump strongly criticized the Fed for the rate at which it was raising rates, again indicating that it wanted interest remain low.
"The Fed is making a mistake. They are so tight. I think the Fed has gone crazy, "he told reporters during a trip to Pennsylvania on Wednesday. "This is a correction we have been waiting for a long time. But I really do not agree with what the Fed does, okay?
Concerns about interest rates had shaken bank stocks, as the KBW Bank index plunged 5.8% from last week. However, bank stocks dominated the market as trading opened on Friday morning, reflecting better than expected third-quarter results at the start of the earnings season. JPMorgan Chase announced a profit up 24% to $ 8.38 billion, mainly due to the strength of consumer activities. Citigroup and Wells Fargo both reported more favorable earnings than analysts predicted.
Markets have experienced a historic ascent – the Dow and S & P indexes each having reached dozens of new highs since 2016 – driven by the strength of the US economy and strong corporate earnings, which they hope will will lead to strong retail performance, despite the difficulties this week, said Ivan Feinseth, an analyst at Tigress Financial.
"The strong recovery shows me that bulls are still in control and that the market wants to go higher," Feinseth said.
Earlier Thursday, National Economic Council Director Larry Kudlow announced at a press conference the economic policies of the administration and assured the public that "the corporate war is over."
"We are the world's most fashionable economy at the moment," said Kudlow. "With all due respect, I do not think it sounds like high sugar."
Treasury Secretary Steven Mnuchin on Thursday met with Chinese central bank governor Yi Gang at a World Bank conference in Indonesia a day after warning China against a "competitive devaluation" "compared to the US dollar, as the trade war intensified. The renminbi has dropped "significantly" during the year, and the Treasury Department is closely monitoring this operation to ensure that China does not manipulate its currency to gain an advantage in the trade war Mnuchin told the Financial Times.
He said that he wanted to discuss the currency with Beijing in the context of trade negotiations. "When we look at trade issues, there is no doubt that we want to make sure that China does not make competitive devaluations," he told the business paper.
Some have found reason for optimism after the announcement of President Trump's meeting with Chinese leader Xi Jinping at the Group of 20 summit to be held next month in Buenos Aires to discuss the intensification of the trade dispute.
"Any easing of tensions with China would be a huge catalyst for the market," Feinseth said.
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