Bank profits boost S&P, Nasdaq; consumer stocks weigh on Dow

The S&P 500 and Nasdaq trimmed early gains, but remained higher in early afternoon trading on Friday after strong earnings from large U.S. lenders that bode well for the rest of the earnings season. The Dow was little changed, held back by a drop in consumer stocks after a report showed U.S. retail sales and core retail sales increased less than expected in December. Trading volumes were light ahead of a three-day weekend.

Bank of America (BAC.N), JPMorgan (JPM.N) and Wells Fargo all reported quarterly profits that beat analysts’ expectations and expressed optimism about 2017 in their first public comments about earnings since the U.S. presidential election. Bank of America jumped as much as 2.1 percent to $ 23.41, their highest since the financial crisis. JPMorgan surged 2.2 percent at a record high of $ 88.17 and Wells Fargo gained 3.1 percent to $ 56.20. Goldman Sachs (GS.N) hit a more than nine-year high, while Morgan Stanley (MS.N) touched a more than eight-year high.

Five of the 11 major S&P sectors were higher, with the financial index’s .SPSY 0.45 percent rise leading the advancers. The KBW Bank index .BKX was up 0.60 percent. The combined profit of S&P 500 companies is estimated to have risen 6.2 percent in the fourth quarter, largely helped by financial companies, according to Thomson Reuters. The biggest boost was from Facebook (FB.O), which jumped 1.6 percent to $ 128.65 after Raymond James upgraded the stock.

“Financials have had a very good run post election and the data we’ve gotten today from the big banks has been very good and we do expect this sector to post strong earnings mostly due to the rising interest rate environment,” said Jon Adams, senior investment strategist at BMO Global Asset Management.

At 12:42 p.m. ET (1742 GMT) the Dow Jones industrial average .DJI was down 9.15 points, or 0.05 percent, at 19,881.85. The S&P 500 .SPX was up 4.55 points, or 0.20 percent, at 2,274.99 The Nasdaq Composite .IXIC was up 29.85 points, or 0.54 percent, at 5,577.34. It had hit a record high earlier in the day.

U.S. stocks overall have been on the rise since the election on optimism that U.S. President-elect Donald Trump’s policies will benefit the economy. The S&P financial sector has jumped about 17 percent since the election, outpacing the S&P 500’s 6.1 percent rise. Advancing issues outnumbered decliners on the NYSE by 1,780 to 1,039. On the Nasdaq, 2,017 issues rose and 784 fell.  The S&P 500 index showed 29 new 52-week highs and three new lows, while the Nasdaq recorded 109 new highs and seven new lows.

But, analysts fear the market has run too far too soon, with Trump’s policies expected to hit legislature hurdles, and with stock valuations stretched.

“There is a lot of optimism baked in 2017 as far as earnings go and we’ve come a long way very quickly so there’s scope for a pullback, but overall the outlook for 2017 is relatively positive,” said Adams.