By Victor Reklaitis, MarketWatch , Ryan Vlastelica
J.P. Morgan, Wells Fargo, Bank of America and retail sales in focus
U.S. stock futures pointed to modest gains at the open on Friday as a number of key bank earnings reassured investors that the sector's strong recent rally was justified, though trading could be light going into a long holiday weekend.
Markets have been in an uptrend since November's presidential election, the bulk of these gains (http://www.marketwatch.com/story/stock-markets-trump-rally-is-mostly-a-bank-rally-2016-11-17) coming from the financial sector as investors have assumed it would benefit from deregulation under President-elect Donald Trump's incoming administration and an environment that is expected to see rising interest rates.
The size of the rally -- the financial sector is up about 17% since the election -- could have left stocks vulnerable if the results disappointed.
J.P. Morgan Chase & Co.(JPM) reported earnings and revenue that surged past expectations (http://www.marketwatch.com/story/jp-morgan-reports-better-than-expected-earnings-2017-01-13), helped by its trading division, while earnings at Bank of America Corp.(BAC) rose 43%. On the downside, Wells Fargo & Co.(WFC) reported weaker-than-expected earnings (http://www.marketwatch.com/story/wells-fargo-profit-falls-revenue-misses-estimate-2017-01-13) and revenue in its first full quarter of results since its sales-tactics scandal erupted in September.
Wayne Kaufman, chief market analyst at Phoenix Financial Services, said the results proved that the sector's postelection rally had been warranted.
"J.P. Morgan had a terrific beat; BofA, a very nice one," said Kaufman. "You'd have to believe that the economy will be lackluster going forward to think that banks won't do well from here. Their valuations are still good, because they have more earnings power than investors are giving them credit for."
Dow Jones Industrial Average futures edged up by 10 points, or 0.1%, to 19,814, while S&P 500 futures inched higher by 1 point to 2,264. Nasdaq-100 futures tacked on 6 points, or 0.1%, to 5,040.
(http://www.marketwatch.com/story/what-to-expect-from-wells-fargo-earnings-impact-of-sales-tactics-scandal-2017-01-12)See also:Bank ETFs still favored as investors see growth and Trump bump ahead (http://www.marketwatch.com/story/bank-etfs-still-favored-as-investors-see-growth-and-trump-bump-ahead-2017-01-11)
In the latest economic data, U.S. retail sales rose 0.6% in December. Producer prices were up 0.3%.
On Thursday, the Dow and Nasdaq Composite both closed down by 0.3% (http://www.marketwatch.com/story/dow-futures-descend-as-analysts-question-the-trump-rally-2017-01-12), while the S&P 500 shed 0.2%. The Dow was on track for a weekly loss of 0.4% as of Thursday's close, the S&P was down 0.3%, and the Nasdaq was up 0.5%. U.S. financial markets will be closed Monday for Martin Luther King Jr. Day (http://www.marketwatch.com/story/which-us-markets-are-closed-for-martin-luther-king-jr-day-2017-01-12).
Other economic news: Readings on consumer sentiment in January and business inventories in November are slated to hit at 10 a.m. Eastern Time. Economists polled by MarketWatch expect 98.8 for the sentiment figure.
Philadelphia Fed President Patrick Harker is due to give a speech in Philadelphia about economic mobility at 9:30 a.m. Eastern.
In remarks late Thursday (said%20the%20U.S.%20economy%20faces%20no%20serious%20short-term%20obstacles), Fed chief Janet Yellen reiterated her support forexisting regulations on banks and said the U.S. economy faces no serious short-term obstacles.
In overseas economic news, data showed that China's exports last month fell (http://www.marketwatch.com/story/chinas-exports-fall-2-in-2016-extending-decline-2017-01-13) by 6.1%, more than expected.
Corporate movers: Car maker Fiat Chrysler Automobiles NV (FCA.MI) (FCA.MI) was in focus as its stock rebounded in European trading, but its U.S.-listed shares were down in premarket action. Fiat fell Thursday after the Environmental Protection Agency alleged the company had used software to cheat on diesel emissions testing (http://www.marketwatch.com/story/fiat-chryslers-stock-plunges-epa-issues-notice-of-violation-2017-01-12).
Other markets:Oil futures (http://www.marketwatch.com/story/oil-higher-after-saudi-arabia-cuts-output-china-imports-rise-2017-01-13), gold futures and a key dollar index (http://www.marketwatch.com/story/dollar-recaptures-lost-ground-after-losses-linked-to-trump-conference-2017-01-13) were all trading lower. European stocks (http://www.marketwatch.com/story/fiat-rebound-sends-european-stocks-higher-into-the-weekend-2017-01-13) traded higher, and Asian markets closed mixed (http://www.marketwatch.com/story/asian-markets-largely-retreat-on-profit-taking-2017-01-12).
(END) Dow Jones Newswires
January 13, 2017 08:47 ET (13:47 GMT)
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