[New York Stock Market] Inflation Easing Hopes Amid Recession Warnings... Nasdaq Up 0.71%

[Asia Economy New York=Special Correspondent Joselgina] Major indices of the U.S. New York stock market closed higher on Friday the 13th (local time) as inflation easing expectations continued despite weak earnings results from large banks such as JP Morgan and recession warning messages.

On the day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 34,302.61, up 112.64 points (0.33%) from the previous session. The S&P 500, centered on large-cap stocks, rose 15.92 points (0.40%) to 3,999.09, and the tech-heavy Nasdaq index closed up 78.05 points (0.71%) at 11,079.16.

[Image source=Reuters Yonhap News]

On a weekly basis, the S&P 500 and Nasdaq indices extended their gains for the second consecutive week. The Nasdaq's weekly gain was 4.82%. The S&P 500 rose 2.67%, and the Dow increased by 2%.

Within the S&P 500, eight sectors excluding real estate, utilities, and industrial-related stocks rose. Tesla fell 0.94% from the previous session after Guggenheim downgraded its investment rating. Logitech also dropped more than 3% after Deutsche Bank downgraded its investment opinion citing a downturn in the PC market and weakening demand.

Large bank stocks that released earnings on the day also closed higher across the board. Bank of America (BoA) rose 2.20% on earnings that exceeded expectations. Citigroup increased 1.69% despite a sharp decline in net income. Wells Fargo also closed up 3.25% despite a 50% plunge in net income due to deterioration in the mortgage loan sector.

Investors are closely watching the earnings season for the fourth quarter of last year, which began in earnest with large banks, and the recession outlook confirmed through corporate earnings. Ross Mayfield, an investment strategy analyst at Bernard, said, "Bank earnings initially weighed on the overall market (downward pressure) early in the session but later reversed."

Jamie Dimon, chairman of JP Morgan, known as the "Emperor of Wall Street," reiterated concerns about a mild recession on the day. JP Morgan also disclosed a 49% increase in loan loss provisions to $2.3 billion compared to the previous quarter in preparation for credit losses. Executives at Citigroup and BoA also stated they expect a "mild recession."

The full-scale earnings season also began on the day starting with large banks. According to FactSet, net income of S&P 500-listed companies for the fourth quarter of last year is estimated to have decreased by 4.1% compared to the same period last year. This is the first quarterly net income decline since the third quarter of 2020.

Expectations for easing inflation continued. According to the University of Michigan's January consumer sentiment survey, expected inflation over the next year was 4.0%, down from 4.4% the previous month. This marks the third consecutive month of a reduced increase. The figure is also the lowest since April 2021. The 5-year expected inflation rose slightly to 3.0% from 2.9% the previous month.

CNBC reported, "Following the December Consumer Price Index (CPI) released the day before, inflation has decreased again," adding, "This is raising hopes that the Federal Reserve (Fed) may slow its tightening." The University of Michigan's January consumer sentiment index was preliminarily recorded at 64.6, surpassing both the previous month's final figure (59.7) and Wall Street expectations.

Oil prices continued a seven-trading-day rise on expectations of recovering crude oil demand in China. On the New York Mercantile Exchange, February delivery West Texas Intermediate (WTI) crude oil closed at $79.86 per barrel, up $1.47 (1.88%) from the previous session.