A slowdown in mortgage lending and a decline in the value of equity investments helped send Wells Fargo & Co.’s second-quarter profit down 48%. The San Francisco-based bank said it earned $3.12 billion in the quarter, down from $6.04 billion a year ago. Per-share earnings totaled 74 cents. The bank posted revenue of $17.03 billion, down 16% from $20.27 billion a year ago. Analysts expected $17.48 billion. The market downturn prompted Wells Fargo to take a $576 million charge to account for a decline in the value of its venture-capital and private-equity investments. Rising interest rates, meanwhile, hit the bank’s mortgage business, drying up demand for refinancings. Wells Fargo, one of the country’s largest mortgage lenders, said originations fell 36% in the second quarter. Investors are paying attention to big-bank earnings for signs about whether a recession is on the horizon. JPMorgan Chase & Co. and Morgan Stanley reported lower second-quarter profits Thursday, sending bank stocks down across the board. The bank said it set aside $235 million in new funds to cover potential losses because of loan growth it experienced during the quarter. A year ago, the bank released $1.64 billion in funds it had set aside for potential loan losses. Outstanding loans rose 11% from a year ago and 4% from the previous quarter. Wells Fargo’s commercial segment powered the growth, recording a 15% increase from a year ago. Loans in the bank’s consumer division rose 5%. The bank said its net interest income, a measure of lending profit, rose 16% to $10.2 billion, thanks to higher rates and loan balances. Wells Fargo expects net interest income to increase about 20% in 2022 compared with 2021. Wells Fargo shares were up 6.2% Friday.

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At the end of the week, the Swiss stock market recovered some of its recent losses. The SMI gained 1.7 per cent to 10,982 points. Among the 20 SMI stocks, there were 17 price gainers and two price losers, and one share closed unchanged. 43.2 (previously: 34.26) million shares were traded. Economic cyclicals such as ABB (+1.9%) and Sika (+2.4%) were sought after, but also pharmaceutical stocks, above all Lonza (+3.6%). Positive results of a study on a breast cancer therapy helped Roche to gain 2.5 per cent. However, investors also picked up defensive stocks such as Nestle (+1.9%) and Givaudan (+0.9%). Richemont fell by 2.9 per cent, although the luxury goods group had published strong figures for the first financial quarter. Weak economic data from China, an important sales market for the company, had a negative impact here. At Partners Group (-0.3%), the interim report for the first half of the year was met with a negative response. Within the second tier, Ems-Chemie rose 1.6 per cent having presented business figures. First-half EBIT was 5 percent above consensus, UBS noted, recalling that Ems-Chemie had already issued a profit warning in June.

European shares advanced on Friday as a slight shift in tone from some Federal Reserve officials had investors paring back their 100 bps rate hike bets. Strong US retail sales figures in the early afternoon also provided reassurance that the economy is resilient while Italian political turmoil and worries that the Kremlin will end supplies to the Nord Stream pipeline that channels Russian natural gas to Europe have added to recession fears for the continent. At the close, the Stoxx Europe 600 index gained 1.8% to 413.8 points. In Paris, the CAC 40 and the SBF 120 each advanced 2%. In Frankfurt, the DAX 40 increased by 2.8% and the FTSE 100 added 1.7% in London. However, for the week as a whole, the Stoxx Europe 600 index gave up 0.8%. The CAC 40 and the SBF 120 are at equilibrium. The DAX and FTSE 100 were down 1.2% and 0.5% respectively. European car stocks rose on Friday, benefiting from cheap buying. In Paris, Renault gained 6.9%, Valeo advanced by 4.5%, Faurecia added 5.6%, Plastic Omnium advanced by 3.5% and Stellantis rose 2.4%. In Frankfurt, Mercedes-Benz gained 4.3% and Volkswagen added 3.5%. Atos gained 5.2%. JPMorgan started tracking aircraft manufacturer Dassault Aviation (+3.4%) at "neutral" with a target price of EUR 162. European luxury goods stocks fell back after British company Burberry (-3.8% in London) and Swiss company Richemont (-2.9% in Zurich) reported quarterly sales weighed down by containment measures in China. In Paris, however, Kering finished at equilibrium, LVMH gained 0.3% while Hermès managed to increase by 2.5%. German airline group Lufthansa stated on Friday expecting to post a positive adjusted operating profit in the second quarter, according to preliminary unaudited data. On the Frankfurt stock exchange, Lufthansa shares gained 6.9%. Other airlines also soared: Air France-KLM added 6.6% in Paris, IAG, parent company of British Airways and Iberia, gained 3.8% in London.

U.S. stocks rebounded Friday, capping a volatile week during which investors tried to reconcile a flurry of corporate-earnings reports and data that at times appeared to offer conflicting narratives on the economic outlook. The S&P 500 rose 72.78 points, or 1.9%, to 3863.16 on Friday, snapping a five-session losing streak. Financial stocks paced the benchmark’s gain. Citigroup climbed 13% while State Street added 9.7%. The tech-focused Nasdaq Composite added 201.24 points, or 1.8%, to 11452.42, and the Dow Jones Industrial Average rose 658.09 points, or 2.1%, to 31288.26. All three indexes suffered weekly losses. The S&P 500 fell 0.9%, the Nasdaq dropped 1.6% and the Dow slipped 0.2% for the week. Citigroup reported earnings ahead of the market open, sparking the rally in the banking sector. Citi posted better-than-expected profit and revenue while State Street also beat Wall Street’s expectations. U.S. Bancorp gained $2.32, or 5.2%, to $46.57, while Bank of America rose $2.12, or 7%, $32.25. As a group, financial stocks within the S&P 500 climbed 3.5%. Shares of Pinterest jumped $2.84, or 16%, to $20.40. The Wall Street Journal reported that activist investor Elliott Management has taken a big stake in the social-media company. Vonage Holdings shares rose $1.33, or 6.8%, to $20.98 after Swedish telecom-equipment giant Ericsson said the Committee on Foreign Investment in the U.S. had authorized its $6.2 billion proposal to buy the company. UnitedHealth Group shares added $27.32, or 5.4%, to $529.75 after the company raised its outlook for the second consecutive quarter and posted higher revenue and profit for the recently ended period.

In Asia, major indexes broadly display gains on Monday. The Shanghai Composite and the Hang Seng Index in Hong Kong show the most significant increases, rising by 1.5 and 2.6 per cent respectively. In Seoul, the Kospi adds 1.7 per cent led by gains in retail, financial and semiconductor stocks. The two index heavyweights Samsung Electronics and SK Hynix rise by 2.5 and 3.9 per cent each. Japan markets are closed for the Marine Day holiday.

Long-dated U.S. government debt yields slipped on Friday and had their third weekly decline of the past four weeks, after U.S. economic data showed a decline in inflation expectations from the University of Michigan sentiment survey. The 10-year Treasury note was yielding 2.925%, down 4 basis points. The 2-year Treasury note on the other hand rose by one basis point to 3.128%.

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