U.S. stocks pared early losses on Friday with the Dow turning mildly positive as investors scrutinized more economic data and Federal Reserve commentary following Thursday’s promising inflation report, as well as a flurry of big-bank earnings.
What’s driving markets? Corporate news was the market’s main focus on Friday as banks and other companies rolled out their results for the quarter ended in December. Shares initially sunk as investors focused on weak income from capital markets and investment banking segments instead of the banks’ overall earnings, analysts said. They were also perturbed by larger-than-expected loan-loss reserves set aside to gird against a spike in defaults.
Katie Stockton, a technical strategist at Fairlead Strategies, said the CBOE Volatility Index VIX, -1.75%, otherwise known as “the VIX” or the Wall Street “fear gauge” was showing signs of complacency after the strong rally in stocks earlier in the week. The index stood at 19.3 early Monday, not far from its August lows.
Despite Thursday’s CPI report showing inflation easing further in December, futures traders have cemented expectations for more Federal Reserve interest rate hikes in February and March.More U.S. economic data was on the way Friday one day after the inflation report showed the first monthly decline in consumer prices in more than two years. Stocks saw a choppy day of trading on the back of that, which to some was a sign investors had their hopes even higher for that ease in prices.