Wall Street’s main indexes inched higher in choppy trading on Friday after U.S. President Donald Trump confirmed his meeting with Chinese counterpart in two weeks, while worries over credit risks at regional banks kept investors on edge.
Bank stocks faced selling pressure earlier in the day, extending declines from the previous session when Zions Bancorporation disclosed losses tied to two commercial and industrial loans and Western Alliance revealed it had initiated a lawsuit alleging fraud by Cantor Group V, LLC.
The selloff rekindled concerns over lax lending standards in a sector already grappling with two auto bankruptcies, more than two years after the collapse of Silicon Valley Bank.
Most regional bank stocks, however, stabilized on Friday. The KBW regional banks index rose 1.2%, rebounding from Thursday’s drop of 6.3%, its biggest since early April.
The broader S&P financial index edged up 0.6%.
“They were possibly oversold yesterday and we’re now getting positive earnings from these regional banks that confirm the earnings growth that we saw with the larger global banks. I think that is helping to buoy investor optimism,” said Sam Stovall, chief investment strategist at CFRA Research.
Truist Financial shares gained 3.6% after the bank reported higher third-quarter profit. Fifth Third Bancorp rose 3%.
Zions shares rose 6.4%, while Western Alliance advanced 4%.
Robust earnings from big U.S. banks this week have set an upbeat tone for the start of the third-quarter reporting season. But with elevated equity valuations, investors are treading cautiously.
At 10:14 a.m. ET, the Dow Jones Industrial Average rose 233.15 points, or 0.51%, to 46,185.39. The S&P 500 gained 24.60 points, or 0.37%, to 6,653.67, while the Nasdaq Composite added 80.13 points, or 0.36%, to 22,642.67.
The main U.S. indexes were on track to register weekly gains, if current levels hold.
The CBOE volatility index investors’ fear gauge, dropped to 23.89 points, after hitting its highest in nearly six months at 28.99 earlier in the day.
On the trade war front, Trump said his proposed 100% tariff on goods from China would not be sustainable and that he would meet China President Xi Jinping in South Korea.
The S&P 500 consumer discretionary rose 0.6% with Tesla gaining 1.8%. Tech stocks added 0.3%.
Eli Lilly fell 2.6% after Trump said he would bring down prices of weight-loss drugs.
State Street dropped 4.6% after the bank’s third-quarter net interest income missed estimates.
Declining issues outnumbered advancers by a 1.09-to-1 ratio on the NYSE and by a 1.29-to-1 ratio on the Nasdaq.
The S&P 500 posted four new 52-week highs and two new lows, while the Nasdaq Composite recorded 16 new highs and 73 new lows.
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