The country’s largest bank saw profits surge. However, it wasn’t enough for lenders to climb the wall of worry.
JPMorgan Chase rose after the company reported a sharp rise in net income. The reaction wasn’t universal, however, as Citigroup and State Street both fell sharply. The KBW Nasdaq Index fell 2.4%. While some of the largest banks may be able to absorb higher deposit costs, the rest of the sector may not be able to.
However, if one positive theme emerges in earnings, it’s a confident consumer. Eaters helped snack food maker PepsiCo and summer travelers boosted Delta Air Lines results. Heard’s Telis Demos wrote that by taking out credit on credit cards, they did a lot better for big banks too.
These mixed results only reinforce the impression that this economy is very confusing. The market rallied on confidence that easing inflation will prevent the Federal Reserve from raising interest rates. But parts of the market are still lagging behind, particularly banks.
The S&P 500 is up over 17% this year after falling 0.1% on Friday. But the Dow Jones Industrial Average is up nearly 4% year over year, gaining 113 points, or 0.3%, on Friday. The Nasdaq Composite is up almost 35% this year, despite falling 0.2% on Friday.
This analysis comes from the journal’s Heard on the Street team. Subscribe to the free daily afternoon newsletter here.