U.S. stocks struggled for direction during midday trading amid key earnings reports from financial heavyweights.
The yield on the benchmark 10-year U.S. Treasury ticked up slightly to 3.47%. The dollar index ticked up 0.21% to $102.21.
Stocks pared early losses after the U.S. Michigan consumer sentiment survey for January rose to a nine-month high of 64.6 from 59.7 last month. The expectations index rose to 62.0 vs. 59.9 last month.
The news provided an optimistic outlook after a more downbeat town from America’s biggest banks, who center stage to kick off the fourth quarter’s earnings season. Their earnings showed continued resilience in the face of economic headwinds, though many said they were taking steps to prepare for a recession in the U.S.
JPMorgan (JPM) posted better-than-expected fourth-quarter earnings, as CEO Jamie Dimon said the the U.S. economy “remains strong.” However, the bank said its central case for this year is a mild recession. JPMorgan said earnings for the three months ending in December were pegged at $11.1 billion, or $3.57 per share, up 7.2% from the same period last year.
Bank of America (BAC) reported fourth-quarter earnings that showed the bank’s revenue benefited from higher interest rates. Bank of America reported revenue of $24.5 billion in the quarter, topping estimates of $24.2 billion. That was 11% higher from the year-ago quarter.
Wells Fargo (WFC) also posted quarterly earnings that beat expectations, while revenue came in below Wall Street forecasts. The financial heavyweight reported fourth-quarter earnings of 67 cents per share on revenue of $19.7 billion, compared with year-ago earnings of $1.38 a share on revenue of $20.9 billion.
BlackRock’s (BLK) fourth-quarter profit dropped 23%, while the bank reported net income of $1.26 billion in the same period a year earlier. Citigroup (C) posted net income of $2.5 billion, or $1.16 per diluted share, which slightly topped expectations for $2.3 billion, or $1.14 per share. However, profit fell 21%.
Bank stock were down across the board Friday morning but moved upward in afternoon trading.
In other stock-specific moves, shares of Tesla (TSLA) sank as much as 5% after the company cut prices for their Model 3 and Model Y vehicles. The news appeared to drag down other automakers, including Ford (F) and General Motors (GM), which both fell more than 5%.
And Delta Air Lines (DAL) shares dropped as much as 7.8% after the carrier forecast current-quarter profit below expectations amid higher operating costs.
The moves Friday came after stocks finished higher on Thursday after investors digested optimistic inflation data that showed prices increased at a slower annual rate in December. Consumer-price inflation slowed to 6.5% in December over the prior year, cooling from 7.1% a month earlier.
Core CPI, excluding volatile food and energy components, prices climbed 5.7% year-over-year and 0.3% over the prior month. The core CPI reading came in line as expected from Bloomberg economist forecasts.
In response to the data, investors grew more confident that the Fed could ease the pace of its tightening at its next monetary policy meeting, which starts Jan. 31.
“When it comes to the Fed, the release led to growing expectations that they would downshift the pace of rate hikes again at the February meeting, moving from 50bps last time down to 25bps,” Jim Reid and colleagues at Deutsche Bank wrote in an early-morning note Friday.
Central bankers have made clear they aren’t done with interest rate increases. Fed Chair Jerome Powell stressed on Tuesday the importance of stable inflation, which could lead the central bank to take actions that are necessary, even if not popular.
Meanwhile, other Fed officials like Philadelphia Fed President Patrick Harker and Atlanta Fed President Raphael Bostic have echoed remarks that could suggest that the central bank may be open to slowing the pace of rate hikes.
Elsewhere, Bitcoin rose nearly 3% to trade around $18,854.39. The cryptocurrency reached a two-month high following December inflation data on Thursday. On the corporate news front, Crypto exchange Crypto.com is cutting down its global workforce by 20% as the company says its navigating ongoing economic headwinds.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv