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THE GIST (“THE WHAT”)
Markets cheered at the solid start to the third quarter earnings season by the nation’s largest banks, brushing aside the intensifying trade tensions for now. Rallying sharply at the open and hitting a 3-week high, the index hovered tightly around the 3000 level for most part of the afternoon session. Pulling back slightly going into the close, the index closed off of session highs and 1% shy of hitting all-time highs at 2995.68, up 29.53 points and 1.00% over previous session’s close.
THE DETAILS (The “How & Why”):
Sentiment soared after JPMorgan Chase & Co. and Citigroup Inc. beat revenue and profit expectations in the wake of falling interest rates and flattening yield curve. The IMF warned of the slowing global economic growth that could fall to its slowest pace since the 2008 financial crisis to 3%. Investor reaction, however, remained muted as investors stayed focused on the positive start to the earnings season.
JPMorgan Chase & Co. jumped 3.01% and logged an all-time high on posting record revenue. Citigroup Inc. also climbed 1.40% following better-than-expected revenues from fixed-income, currency and commodities trading.
Wells Fargo & Co also gained 1.70% on less-than-feared impact of the fake-account scandal. Goldman Sachs Group Inc. also underperformed after missing profit estimates by steep margins but managed to erase the day’s losses and close 0.31% higher. Meanwhile, Bank of America Corp closed 2.02% higher ahead of its earnings report tomorrow.
Among other strong individual gainers on the back of strong third quarter earnings were UnitedHealth Group Inc., Charles Schwab Corp. and Johnson & Johnson, gaining 8.16%, 5.36% and 1.62%, respectively. Communication Services sector also outperformed with Facebook Inc. jumping 3.06%. NVIDIA Corp led the Technology space higher, surging 5.28% following bullish comments by Bank of America Merrill Lynch.
Health Care sector led the day’s gains, up 1.76%. Rosy guidance issued by UnitedHealth Group boosted other health insurance stocks including Cigna Holding Co and Humana Inc. Consumer Staples and Utilities were the only two sectors not participating in the day’s strong gains and closing modestly lower amid improving risk sentiment.