Wall Street Awaits Big Bank Earnings as Strong Profit Expectations Face Key Test

The S&P 500 rose to end just short of a record high on Friday, as a blockbuster Nasdaq debut of South Korea's SK Hynix fueled optimism about memory-chip makers, while investors looked ahead to quarterly earnings season kicking off next week. The artificial intelligence trade returned to the spotlight after SK Hynix ended 13% above its offering price at $170 in a high-profile U.S. listing. The semiconductor company raised over $26 billion by selling American Depositary Receipts priced at $149 each.

U.S. stocks added to gains after President Donald Trump said that Iran had asked to continue talks and the U.S. had agreed, but that the June ceasefire was 'over.' Attacks between the U.S. and Iran this week revived concerns that high energy prices could fuel more inflation and force the Federal Reserve to hike interest rates. Reports from big U.S. banks will kick off the second-quarter earnings season next week.

Earnings Season Kicks Off With High Expectations

Analysts are expecting S&P 500 earnings to surge 24% from a year earlier, with technology companies driving much of the growth, according to LSEG I/B/E/S. 'This is a high-bar quarter with a narrow margin of error,' said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis. 'The banks will give us a good read on the underlying economic strength and what consumers and businesses are doing.'

Thanks to increased corporate profit estimates, the S&P 500 is trading at about 20 times expected earnings, down from an earnings multiple of 21 in late May, even though the benchmark is trading near record highs. Chipmakers have been among the biggest beneficiaries of this year's AI-driven rally, fueled by expectations of heavy spending by hyperscalers. But concerns over stretched valuations and profit taking have recently injected volatility into the sector.

Market Close and Weekly Performance

The S&P 500 climbed 0.42% to end the session at 7,575.39 points. The Nasdaq gained 0.29% to 26,281.61 points, while the Dow Jones Industrial Average rose 0.29% to 52,637.01 points. Eight of the 11 S&P 500 sector indexes rose, led by information technology up 1.65%, followed by a 1.46% gain in consumer discretionary. The PHLX chip index gained 0.06%, up for a third straight day. For the week, the S&P 500 added 1.2%, the Nasdaq climbed 1.7% and the Dow fell 0.5%.

In individual stocks, Meta Platforms jumped 6% to its highest level since April. Moderna tumbled almost 11% in its worst day in over a year. Delta Air Lines dropped 1.8% even after forecasting third-quarter profit above expectations. Next week's June inflation data will offer fresh insight into the Fed's likely monetary policy path, while Fed Chair Kevin Warsh is also scheduled to testify before the House Committee on Financial Services.