Stocks Edge Up As U.S. Banks Report Earnings
January 13 2017 - 10:03AM
Dow Jones News
By Riva Gold
U.S. stocks advanced Friday amid hopes the start of banks'
earnings season could help rekindle a postelection rally.
The Dow Jones Industrial Average opened up 28 points, or 0.1%,
to 19918, in early trading. The S&P 500 rose 0.1% and the
Nasdaq Composite was 0.2% higher, as investors focused on
fourth-quarter earnings from major banks.
The Stoxx Europe 600 rose 0.7% in recent trading, while London's
FTSE 100 index added 0.4%.
Big bank shares rose following a slew of earnings reports. J.P.
Morgan Chase & Co. rose 0.6% after the largest U.S. bank by
assets posted stronger than expected fourth-quarter results. For
the year, it earned $24.7 billion, an all-time record.
Bank of America shares were choppy and last up 0.5% after it
reported its biggest annual profit in a decade but revenue for the
latest quarter came in below expectations.
Shares of Wells Fargo ticked up 0.4% even as the bank's
fourth-quarter profit fell.
U.S. lenders have jumped since the November election on
expectations for higher U.S. interest rates and a rollback of
regulation, helping send major stock indexes to record highs. U.S.
stocks fell Thursday, however, as financial shares declined ahead
of the earnings reports.
"You've had quite a rally -- you do need to see positive
surprises come through to drive that a lot further," said Simon
Webber, a global equities manager at Schroders.
The early-Friday bank earnings appear to be good enough to fend
off a fall in the financials sector, some traders said. It's less
clear if they're upbeat enough to revitalize the postelection rally
that in recent weeks has stalled.
Stocks soared in the weeks following the election on hopes that
the new administration will help accelerate a rise in growth and
inflation. But for the past month U.S. stocks have largely moved
sideways, keeping the Dow Jones Industrial Average just shy of the
20000 milestone.
The Dow industrials and the S&P 500 are track to end the
week slightly lower, while gold has gained over 2% and the dollar
has weakened, as popular postelection trades have moved into
reverse.
"I think the market had been giving President-elect Trump a lot
of the benefit of the doubt that his pro-business ideas or plans
are going to be ultimately enacted but that antibusiness things
such as border walls and trade wars will probably not happen," said
Randy Frederick, vice president of trading and derivatives at
Schwab.
Between now and the inauguration on Jan. 20, however, "the
market is in a wait-and-see mode," he said, with investors waiting
for clarity on the new president's top agenda items and the timing
of expected policy changes.
Elsewhere in markets, gains in Europe were led by banks and
health care companies, which had been among the worst performers
for most of the week.
French prosecutors said they opened a probe against Renault on
suspicion of emissions fraud, sending shares of the French car
company down 1.5%. Renault has previously denied using any
so-called defeat devices to cheat on emissions tests.
Shares of Fiat Chrysler Automobiles gained over 4%, however,
after suffering a steep fall Thursday when regulators in the U.S.
accused the car maker of using illegal software to mask emissions.
Chief Executive Sergio Marchionne denied the auto maker subverted
emissions rules or violated any regulations.
Earlier Friday, shares were mixed during Asian trading hours
after data showed Chinese exports fell sharply last month amid weak
demand, adding to some investors' concerns about the health of the
world's second-largest economy. Hong Kong's Hang Seng Index
advanced 0.5% and Japan's Nikkei Stock Average added 0.8%, while
markets in Australia shed 0.8% and Shanghai declined 0.2%.
In government bond markets, the yield on the 10-year U.S.
Treasury note rose to 2.396% from 2.358% Thursday, its lowest
settlement of the year, while 10-year German bund yields were at
0.232% from 0.232%. Yields move inversely to prices.
--Nick Kostov, Emily Glazer, and Eric Sylvers contributed to
this article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
January 13, 2017 09:48 ET (14:48 GMT)
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