Dow gains, S&P 500 hits record as bank stocks surge; Tesla drops 8%, oil prices fall

The S&P 500 and Dow Jones Industrial Average surged to new highs on Friday, buoyed by strong earnings reports from major banks, kicking off a positive start to the third-quarter earnings season.

The S&P 500 rose 0.5%, while the Dow climbed 300 points, or 0.7%. Meanwhile, the Nasdaq Composite gained 0.3%, despite a 7% drop in Tesla shares following a disappointing robotaxi event.

All major indices are on track for weekly gains. The S&P 500 is up 1%, set for its fifth consecutive week in the green. The Dow has risen 0.9%, and the Nasdaq is up 1.1%.

Strong performance by banks

Shares of major banks rose on Friday, following robust earnings results for the third quarter. 

Shares of JP Morgan Chase rose 4% after the company reported a rise in profit and revenues, which beat analysts’ expectations. 

Wells Fargo’s stock gained 5% on stronger-than-expected profits. Shares of Bank of America also surged more than 3%. 

The outlook may signal that a trend of lower net interest income may be starting to emerge in favor of the banks, Sterling said. 

The US Federal Reserve cut interest rates in September for the first time in four and a half years by 50 basis points. 

US producer prices index steady

The producer price index, which gives a measure of wholesale inflation in the US, remained unchanged in September and was below 0.1% expected by analysts. 

The producer price index helped dissipate some concerns about hotter inflation in the US after the CPI index came in above expectations earlier this week. 

Steady wholesale inflation in the US could prompt the US Fed to go ahead with a 25-bps rate cut in its November meeting. 

Tesla slides

Shares of Tesla dropped as much as 8% on Friday after the electric vehicle maker launched its long-awaited robotaxi. 

However, the company did not disclose any details about how fast it can ramp up production or manage regulatory challenges. 

“We were overall disappointed with the substance and detail of the presentation,” Morgan Stanley said on the heels of the event. “As such, we anticipate TSLA to be under pressure following the event.”

Meanwhile, shares of renewable energy and infrastructure solutions provider, Gibraltar Industries fell nearly 6% on Friday. Shares tumbled on weak earnings performance for the third quarter. 

Oil prices fall

Brent and West Texas Intermediate crude oil prices fell on Friday, but are on course to end the week with gains once again. 

Oil prices had gained more than 3% on Thursday, triggered by supply disruptions in the US and ongoing geopolitical tensions in the Middle East. 

However, traders resorted to profit-taking on Friday as Brent prices hovered near $80 per barrel. 

Investors will continue to monitor the situation in the Middle East as the oil market waits for the impending Israel’s retaliation against Iran. 

Experts believe that it is not in Israel’s interest to target Iran’s oil facilities as US President Joe Biden has urged Israel to avoid such an instance. 

In case Iran’s oil facilities are targeted, the world could lose about 4% of its crude oil supply. Prices could rise in such a scenario. 

At the time of writing, Brent prices were down 0.4% at $79.03 per barrel, while WTI was 0.2% lower at $75.47.