Wall Street Turns Green, Bank Earnings and Inflation Data Will Determine Next Week

Wall Street finished higher on Friday (January 9th) as investors shifted their focus to the week ahead. Third-quarter earnings season is about to begin, and inflation data is expected to be released, which could provide clarity on the Federal Reserve’s next policy decision.

All three major US stock indexes rose on the day, posting weekly gains. However, the small-cap Russell 2000 index closed lower than last Friday’s close.
“This is the kind of back-and-forth market we’ve been experiencing, where we’ve had a reversal of sentiment around Iran,” said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. “With conflicting news from the White House and parties in the Middle East, there’s no edge there.”
“That’s why this rally has been quite lackluster,” Mayfield added.

Crude oil prices initially retreated after President Donald Trump said the US would not launch any attacks on Iran before the midterm elections. He added that talks between Washington and Tehran aimed at ending the Iran war that has rocked markets have been “productive.”
West Texas Intermediate and Brent crude for front-month contracts both closed up 0.4%. Benchmark Treasury yields edged higher but remained below Wednesday’s 24-year high.

The third-quarter reporting season kicks off in earnest next week, with major US banks Wells Fargo, Goldman Sachs, Citigroup, JPMorgan Chase, Bank of America, and Morgan Stanley scheduled to release results.

Analysts expect aggregate S&P 500 annual earnings growth of 30.6% for the July-September period. The energy and technology sectors posted the largest year-on-year earnings growth of 123% and 66.5%, respectively, according to LSEG data.

American consumer sentiment, which underpins about 70% of the US economy, has deteriorated this month, according to the University of Michigan, with short-term expectations plummeting to an all-time low.

The Dow Jones Industrial Average rose 423.31 points, or 0.83%, to 51,654. The S&P 500 rose 46.15 points, or 0.59%, to 7,811, and the Nasdaq Composite Index gained 172.83 points, or 0.64%, to 27,366.

Among the 11 major S&P 500 sectors, communication services was the only one to decline percentage-wise. AI-related momentum stocks rallied. The Roundhill Magnificent Seven ETF rose 1% amid a bullish U.S. market, driven largely by the AI ​​boom.

“Chips have been the story this year,” said Michael Monaghan, portfolio manager at Founder ETFs in Dallas. “(This) is a multi-decade technology shift, and it’s just the beginning of whatever’s happening, not the end.”

Elon Musk’s SpaceX reached a deal to acquire a national portfolio of low-band spectrum, posing an immediate challenge to U.S. wireless companies. Telecom companies T-Mobile US, AT&T, and Verizon fell between 8.8% and 13.3%.

Humana jumped 11.6% after U.S. government data showed 95% of the health insurer’s members were in Medicare Advantage plans rated four stars or higher for 2027.

Apple fell 1.1% after media reports that the iPhone maker has told some suppliers to cut production of components for its newly launched iPhone 18 Pro and iPhone 18 Pro Max, as surging memory chip costs and rising prices hurt consumer demand.

Rising stocks outnumbered declining ones by a 1.65-to-1 ratio on the NYSE. There were 141 new record highs and 183 new record lows on the NYSE. On the Nasdaq, 2,756 stocks advanced and 1,997 declined, as advancing issues outnumbered declining ones by a 1.38-to-1 ratio.

The S&P 500 recorded 14 new 52-week highs and five new lows, while the Nasdaq Composite recorded 41 new highs and 209 new lows. Volume on U.S. exchanges was 14.37 billion shares, compared with the 17.76 billion average for the full session over the last 20 trading days.