Wall Street Holds Steady as Bank Stocks Climb, Oil Dips

Wall Street records/ bank stocks rise/ oil prices fall/ U.S. stock market/ S&P 500 high/ Newslooks/ NEW YORK/ J. Mansour/ Morning Edition/ U.S. stock markets held near record highs as major banks reported stronger-than-expected earnings. Bank of America and Goldman Sachs saw gains, while Exxon Mobil and other energy stocks fell with declining oil prices. Walgreens and Wolfspeed also surged after positive financial news.

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Wall Street Record Highs Quick Look

• Market Performance: S&P 500 up 0.1%, Dow down 0.6%, Nasdaq up 0.3%.
• Bank Boost: Bank of America, Goldman Sachs rise on positive earnings.
• Energy Slump: Exxon and energy stocks fall as oil prices drop.
• Company Highlights: Walgreens up on restructuring; Wolfspeed receives $750M government support.
• Global Markets: Chinese stocks decline over weak stimulus prospects.

Wall Street Holds Steady as Bank Stocks Climb, Oil Dips

Deep Look

U.S. stocks held close to record highs on Tuesday as earnings reports from major banks exceeded analysts’ expectations and oil prices saw a significant decline. The S&P 500 inched up 0.1%, maintaining its record-breaking momentum this year with its 46th high. Meanwhile, the Dow Jones Industrial Average dropped 256 points, or 0.6%, and the tech-heavy Nasdaq composite rose 0.3%.

Several financial heavyweights contributed to Wall Street’s steadiness, particularly Bank of America and Goldman Sachs, both gaining over 1% after reporting stronger-than-anticipated quarterly earnings. Charles Schwab also impressed investors, surging by 8.4% after increased customer activity boosted profits beyond predictions. The drugstore chain Walgreens Boots Alliance saw a 10.7% jump after it exceeded forecasts and announced plans to close approximately 1,200 stores as part of its U.S. business turnaround efforts.

Another standout performer was Wolfspeed, a chipmaker specializing in silicon carbide wafers. Wolfspeed’s stock spiked 35.8% after the Biden administration pledged $750 million in funding to support the company’s new facility in North Carolina, marking a significant investment in U.S.-based semiconductor production. This jump cut Wolfspeed’s year-to-date losses significantly.

Energy stocks experienced the opposite trajectory, with Exxon Mobil tumbling 2.8% along with other energy sector companies. Crude oil prices, which have been on a downward trend, fell over 4%, with Brent crude dipping below $74 per barrel after reaching more than $80 last week. Analysts attributed the decline to China’s slower-than-expected economic recovery, which has led to concerns about reduced demand and surplus inventory levels. Additionally, market fears over possible supply disruptions from geopolitical tensions in the Middle East have eased. Israel has not acted on previous threats to target Iranian oil facilities, thus reducing immediate concerns about widespread conflict involving major oil-producing nations.

The decline in energy prices was coupled with a drop in UnitedHealth Group’s stock. The insurance company saw a 9.5% loss despite beating profit expectations. The decrease came as UnitedHealth revised its profit forecast, lowering the upper limit for the year.

On the bond market front, trading of U.S. Treasuries resumed following Monday’s holiday, with the yield on the 10-year Treasury falling to 4.05% from Friday’s 4.10%. This shift followed the release of weaker-than-expected manufacturing data from New York state, underscoring the impact of the Federal Reserve’s elevated interest rates. Manufacturing has struggled more than other sectors amid the Fed’s efforts to balance economic stability with inflation control, even as recent interest rate cuts aim to sustain growth.

In economic policy, the Fed continues its delicate approach, aiming to bring inflation down to its 2% target without sparking the recession many anticipated. Stronger-than-expected economic data have bolstered hopes that this “soft landing” remains achievable.

Meanwhile, overseas markets painted a mixed picture. Chinese stocks faced steep declines amid waning hopes for fiscal intervention from the government to bolster the nation’s struggling economy. Shanghai’s main index dropped 2.5%, while Hong Kong’s Hang Seng plummeted 3.7%. Other Asian and European markets showed varied performance.

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