S&P 500 off lows as banks erase losses after kicking off earnings season By Investing.com

By Yasin Ebrahim

Investing.com — The S&P 500 moved off session lows Friday, after major Wall Street banks erased intraday losses as investors weighed up a string of better-than-expected results, and commentary on a worsening economic outlook. 

The rose 0.10%, the gained 0.09%, or 30 points, and the was up 0.27%.

Wall Street banking stalwarts JPMorgan Chase & Co (NYSE:) and Bank of America Corp (NYSE:) reported that beat on both the top and bottom lines, underpinned by rising interest rates that boosted loan growth. Wells Fargo & Company (NYSE:) and BlackRock Inc (NYSE:) also delivered better-than-expected quarterly results, while Citigroup (NYSE:) reported a on higher credit costs.

The mostly better-than-expected results were accompanied by gloomy remarks on the economic outlook.

JPMorgan said a “mild recession” was its base case and warned that it was beginning to see a slowdown in its auto lending business at a time when the bank’s home lending business has also come under pressure.

The latest University of Michigan survey on , however, pointed to a much healthier economic outlook, hitting a 12-month high. But that was driven by a fall in energy prices, which some believe may prove temporary.

“The narrative has swung too much in the favor of lower commodity prices going forward,” Will Rhind, CEO and Founder of GraniteShares told Investing.com’s Yasin Ebrahim in an interview Thursday. “But that [energy] is still a sector of the market where they are big concerns and problems with supply.”

“Don’t look for the price of energy, oil, or gas to be on linear move down from here…I think that there’s still a lot of potential for a surprise to the upside, especially with the ongoing war in Ukraine,” Rhind added.  

Elsewhere on the earnings front, Delta Air Lines (NYSE:) also reported a on both the top and bottom lines. The airline, however, said it expected to be hit by the cold snap that wreaked havoc on travel and led to a swath of flight cancellations and delays.

In other news, Virgin Galactic (NYSE:) said it was on track for a commercial launch in the second quarter of 2023, sending its shares more than 9% higher.

Defensive stocks were also a drag on the broader market, paced by a decline in the Lockheed Martin Corporation (NYSE:), and Northrop Grumman (NYSE:) after Goldman Sachs delivered a cautioned outlook on the sector as concerns about U.S. government debt could weigh on defensive spending.  

Tesla (NASDAQ:) fell nearly 3% after Guggenheim downgraded the stock to Sell from Neutral on worries that the company’s fourth-quarter results, due Jan. 25, are likely to fall short of Wall Street estimates. The electric vehicle company also slashed prices in Europe and the U.S. to boost waning demand. The price cuts come just weeks after the EV maker cut prices in China for the second time in as many months.