Stocks hit fresh all-time highs as big banks rallied after kicking off the earnings season with solid earnings.

The S&P 500 topped 5,800, heading toward its 45th record in 2024. The benchmark also extended gains into a fifth straight week — its longest winning run since May. The KBW Bank Index hit the highest since April 2022. JPMorgan Chase & Co. climbed 5% after posting a surprise gain in net interest income and raising its forecast for the key revenue source. Wells Fargo & Co. jumped 6% as profit beat estimates.

“We expect earnings season to be solid, including the big banks,” said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management. “Credit card delinquencies are still very low and increased economic activity should drive bank revenues.”

Traders also waded through economic readings. A measure of prices paid to US producers was unchanged in September, suggesting further progress toward tamer inflation. Consumer sentiment unexpectedly fell for the first time in three months as lingering frustration with a high cost of living offset more sanguine views of the job market.

The S&P 500 rose 0.4%. The Nasdaq 100 was little changed. The Dow Jones Industrial Average rose 0.7%. Tesla Inc. dropped 8% after the unveiling of its highly anticipated self-driving taxi was light on specifics. Uber Technologies Inc. and Lyft Inc. climbed at least 9.1%.

The yield on 10-year Treasuries advanced one basis point to 4.07%. The Bloomberg Dollar Spot Index was little changed. West Texas Intermediate crude fell 0.8% to $75.28 a barrel.

“Now that the Fed has started its rate-cutting cycle, the economy should get a further boost from lower interest rates on things like credit card debt and business loans,” said David Lefkowitz at UBS Global Wealth Management. “As a result, we expect 3Q earnings results will be consistent with recent, healthy trends.”

In non-recessionary scenarios, the S&P 500 rises 17% on average in the 12 months after the Fed starts to cut rates, Lefkowitz noted. He reiterated his S&P 500 price targets of 5,900 and 6,200 for December 2024 and June 2025.

Apollo’s Torsten Slok noted that financials have been among top outperformers during the Federal Reserve’s rate cutting cycles that end with a “soft landing.”

He looked at total returns of each sector during the two rate cut cycles that didn’t overlap with a recession, from July 1995 to January 1996 and from September 1998 to November 1998.

In the run-up to the third-quarter earnings season, an unusually large dichotomy took shape, according to Gina Martin Adams, Michael Casper and Wendy Soong at Bloomberg Intelligence. Analysts kept lowering the bar for S&P 500 companies while management guidance implies a significantly stronger outlook — suggesting that companies should easily beat expectations, they noted.

S&P 500 net income growth is now forecast to rise a mere 4.2% in the third quarter, down from more than 7% growth expected in mid-July, thanks mostly to the energy sector. Analysts’ souring outlook is not exclusive to energy, however, as estimates for all sectors except for communication services fell, they noted. 

Currently, 37% of S&P 500 companies are expected to report lower earnings per share than the previous year this quarter, compared to 26.6% last quarter, BI said.

Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp. are likely to flag rising revenue pressures in earnings reports next week as they, along with smaller, regional counterparts, start to reckon with Fed rate cuts.

Net interest income — the difference between what banks earn on loans and pay out on deposits — is set to come off from last year’s peaks with the prospect of further interest rate cuts, though surprises could ensue.

Corporate Highlights:

• BlackRock Inc. pulled in a record $221 billion of total client cash last quarter, pushing the world’s largest money manager to an all-time high of $11.5 trillion of assets as it seeks to become a one-stop shop for stocks, bonds and, increasingly, private assets.
• Bank of New York Mellon Corp.’s third-quarter profit topped expectations after a jump in asset values fueled a 5% increase in fee revenue.
• With the paralyzing labor strike now running for a full four weeks, Boeing Co. is taking a harder line with union representatives by filing unfair labor practice charges, saying the other side has bargained in bad faith and undermined its own deal.
• Humana Inc. released final quality ratings for private Medicare Advantage health plans.
• BP Plc expects its net debt to have risen in the third quarter due to lower refining margins and changes to the timing of asset sales

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.4% as of 1:08 p.m. New York time
• The Nasdaq 100 was little changed
• The Dow Jones Industrial Average rose 0.7%
• The MSCI World Index rose 0.5%Currencies
• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0944
• The British pound was little changed at $1.3069
• The Japanese yen fell 0.3% to 149.04 per dollar

Cryptocurrencies

• Bitcoin rose 4.2% to $62,247.53
• Ether rose 3% to $2,437.38

Bonds

• The yield on 10-year Treasuries advanced one basis point to 4.07%
• Germany’s 10-year yield was little changed at 2.27%
• Britain’s 10-year yield was little changed at 4.21%

Commodities

• West Texas Intermediate crude fell 0.8% to $75.28 a barrel
• Spot gold rose 1.1% to $2,659.49 an ounce