Investors bought the early-day slump in banks following a spate of better-than-expected earnings, causing US indexes to end higher Friday.

Investors bought the early-day slump in banks following a spate of better-than-expected earnings, causing US indexes to end higher Friday, while fears about a weakening economy remained.

The Dow Jones increased by 0.33%, or 112 points, the Nasdaq increased by 0.71%, and the S&P 500 increased by 0.40%.

JPMorgan Chase & Co and Bank of America Corp, both Wall Street banking titans, posted quarterly earnings that beat on both the top and bottom lines, ending the day in the green following dip-buying action. Wells Fargo and BlackRock Inc also posted better-than-expected quarterly earnings, but Citigroup reported a profit decline due to higher credit charges.

The sparkle from the wave of quarterly profits was slightly muted by advice that signalled economic headwinds were on the way, which might damage consumers and impact on credit demand.

JPMorgan said a "moderate recession" was its base case and warned that its car lending business was slowing at a time when the bank's home lending division was also under pressure.

The most recent University of Michigan consumer mood poll, on the other hand, indicated a considerably brighter economic outlook, reaching a 12-month high. However, this was driven by a drop in energy prices, which some fear is just temporary. costs.

Delta Air Lines also posted a profit beat on both the top and bottom lines. Due to increasing labour expenses, the airline's forecast for first-quarter profitability of 15 cents to 40 cents per share fell short of expectations.

In other headlines, Virgin Galactic said that it will begin commercial operations in the second quarter of 2023, driving its stock up more than 12%.

Defensive stocks were also a drag on the market, led by a drop in Lockheed Martin Corporation and Northrop Grumman after Goldman Sachs issued a cautious view on the sector, citing concerns over U.S. government debt.

Tesla fell 1% after Guggenheim downgraded the stock to Sell from Neutral, citing concerns that the company's fourth-quarter results, due Jan. 25, may fall short of Wall Street expectations. To increase dwindling demand, the electric car manufacturer reduced prices in Europe and the United States. The price reduction came just weeks after the electric vehicle manufacturer reduced pricing in China for the second time in as many months.

The wider market's weekly advance was aided by an inflation data earlier this week, which confirmed forecasts on fewer Fed rises ahead, beginning at the central bank's next meeting in February.

(investing.com, reuters.com)