By Victor Reklaitis, MarketWatch , Ryan Vlastelica
J.P. Morgan, Wells Fargo, Bank of America all gain after results
U.S. stocks rose on Friday, with financial stocks leading the way higher after earnings by some of the country's biggest banks reassured investors that the sector's 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, with the bulk of the 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 bet banks would benefit from deregulation under President-elect Donald Trump's incoming administration and an environment that is expected to see rising interest rates.
The strength of the rally--the financial sector is up nearly 20% 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.
All three stocks rose more than 1% while the Financial Select Sector SPDR ETF (XLF)rose 1.2% and neared its highest level since early 2008 (http://www.marketwatch.com/story/financial-etf-nears-highest-level-since-2008-after-bullish-bank-results-2017-01-13).
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."
The Dow Jones Industrial Average rose 20 points to 19,897, up 0.1% on the day. The S&P 500 added 7 points to 2,277, a rise of 0.3%. The Nasdaq Composite Index climbed 30 points, or 0.5%, to 5,576.
For the week, the Dow is down 0.3% and the Nasdaq is up 1.1%. The S&P is flat. 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). (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 (http://www.marketwatch.com/story/retail-sales-climb-06-in-december-2017-01-13), less than had been expected, while holiday sales (http://www.marketwatch.com/story/holiday-retail-sales-rise-4-to-beat-nrf-expectations-2017-01-13) were up a better-than-expected 4%. Separately, producer prices were up 0.3% (http://www.marketwatch.com/story/producer-prices-jump-along-with-energy-costs-2017-01-13) while business inventories rose 0.7% (http://www.marketwatch.com/story/business-inventories-surge-in-november-2017-01-13).
In remarks late Thursday (said%20the%20U.S.%20economy%20faces%20no%20serious%20short-term%20obstacles), Fed chief Janet Yellen reiterated her support for existing 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 11:35 ET (16:35 GMT)
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