Stocks Edge Up With Focus on Upcoming U.S. Bank Earnings -- 3rd Update
January 13 2017 - 7:41AM
Dow Jones News
By Riva Gold
European stocks and S&P 500 futures advanced Friday as
investors waited to see whether the start of banks' earnings season
could help rekindle a postelection rally.
The Stoxx Europe 600 rose 0.5% midday, while London's FTSE 100
index added 0.3% after ending higher for 13 straight days, its
longest winning streak on record.
Futures pointed to a 0.1% opening gain for the S&P 500 on
Friday, as investors anticipated a report on U.S. retail sales and
focused on fourth-quarter earnings from major banks.
Shares of Bank of America Corp. rose 0.4% in premarket trading
after it kicked off banks' earnings season by beating expectations
on profit as its trading desk benefited from uncertainty around the
U.S. election. Shares of J.P. Morgan Chase & Co. and Wells
Fargo & Co. also advanced ahead of the release of their
results, while Morgan Stanley added 2.6%.
Shares of 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 bourses 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. "I'll be looking for evidence
of improvement in net interest margins from the rate increase we've
seen," Mr. Webber said.
The Federal Reserve raised interest rates in December for the
first time in a year. Higher interest rates tend to boost lenders'
profitability, as the rates they charge on many loans are directly
tied to the Fed's target rate.
Some investors are hoping upbeat news from U.S. banks can help
rekindle a postelection rally driven by hopes the new
administration will help accelerate a rise in growth and
inflation.
After a steep climb, U.S. stocks have largely moved sideways for
the past month, keeping the Dow Jones Industrial Average just shy
of the 20000 milestone. Major global stock indexes are on 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.
Europe's auto sector pared gains midmorning after French
prosecutors said they opened a probe against Renault SA on
emissions, sending shares of the French car company down 2.7%.
Shares of Fiat Chrysler Automobiles gained nearly 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 currencies, the WSJ Dollar Index inched down 0.2%, with the
dollar last down 0.2% against the yen, 0.3% against the euro and
0.7% against the British pound. The Turkish lira fell over 1%
against the dollar, capping a volatile week.
In government bond markets, the yield on the 10-year U.S.
Treasury note was little changed at 2.355% from 2.358% Thursday,
while 10-year German bund yields were at 0.238% from 0.232%. Yields
move inversely to prices.
Nick Kostov, Christina Rexrode and Eric Sylvers contributed to
this article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
January 13, 2017 07:26 ET (12:26 GMT)
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