Dow jones jumps 300 points after bank earnings, rate hike worries ease

Dow jones

U.S. stocks Dow Jones rose on Monday after Goldman Sachs and Bank of America beat sales expectations and amid mounting signals that the central bank will not raise interest rates further at its upcoming meeting.

The Dow Jones Industrial Average was up 1%, or 300 points, in early trade, while the broader S&P 500 gained 0.8% and the tech-heavy Nasdaq gained 1%. Friday’s rally lifted the blue-chip Dow more than 650 points, snapping a five-day losing streak, but all three indexes ended the week down.

Goldman Sachs reported better-than-expected quarterly earnings before the market opened on Monday. Although revenue fell 23% to $11.86 billion, it beat analysts’ estimates by $1 billion as fixed income, which includes government and corporate bonds, rose 55%. Profits fell 48% to $2.79 billion due to lower investment banking activity across the industry. Goldman Sachs shares rose 3.6%.

Meanwhile, Bank of America reported a 5.6% rise in revenue to $22.79 billion, compared with forecasts of $22.67 billion. The bank benefited from higher interest rates and increased net interest income by 22%. But second-quarter profit fell 32% to $6.25 billion. Shares fell 1%.

Volatility is likely to rise this week as Wall Street turns its attention to corporate earnings and tries to reconcile a mixed set of economic signals. Findings from Charles Schwab and IBM will be released later on Monday, with Netflix, Johnson & Johnson, Tesla, Twitter and many others due in the coming days.

The global economic outlook has investors worried, with signs of recession emerging amid rising inflation and putting central banks in the spotlight. The European Central Bank is scheduled to meet on Thursday as the euro zone is shaken by high inflation, a looming energy crisis and other consequences of Russia’s invasion of Ukraine. The bank is expected to raise interest rates for the first time in 11 years.

Ahead of the July 26-27 Federal Reserve meeting, U.S. policymakers signaled another 0.75 percentage point rate hike.

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