The Standard & Poor 500 last week had important American banks displaying robust earnings in fourth quarter. This underlined the confidence concerning the surge in the markets. The markets were already moving up due to the surprise victory of Donald J. Trump in the presidential election. The markets are confident that he will slash corporate taxes, deregulate banks and infrastructure spends. Investors believe that stock markets will go up further if other S&P 500 companies show excellent report cards over the coming weeks. According to Mike Baele of Private Client Reserve, US Bank, earnings are important in this regard, and the markets are already off to better starts.
Down and banks up
Not all was good news through. There was a decline in the Dow. The DJI was at 19,863.26 points, a dip of about 0.14 percent. The S&P 500, in contrast has gained about 0.10 percent touching 2,272.67. McDonald’s along with a number of other consumer stocks dipped post a report showed that core retail sales and US retail sales went up by a lesser amount than expected. Trading volumes were sparse due to three day weekend.
The big banks did extremely well. Wells Fargo, Bank of America and JPMorgan posted quarterly profits much over what was expected by analysts. There was all around optimism for the coming 2017 year. Banks’ share went up by two percent but many banks later surrendered their gains. JPMorgan added about 0.43 percent and Wells Fargo about 1.04 percent. There was a jump of 17 percent in S&P financial sector from the time of the election. It outpaced S&P 500s rise of 6.1 percent. The Nasdaq Composite rose by 0.39 percent to reach 5,569.18. Strongest boost was given by Facebook. The Social Media giant went up by 1.6 percent after analysts upgraded the stock. According to Thomson Reuters, the total profit of the combined S&P 500 companies is anticipated to rise 6.2 percent during the fourth quarter.
Jon Adams of BMO Global Asset Management said that the stock market has risen extremely high and there is thus an ample chance of a pullback. However, the 2017 outlook is extremely positive. The advancing issues were more than declining ones on NYSE by a ratio of 1.49:1. The same ratio is 2.06:1 on Nasdaq. The advancers were clearly the gainers. The Standard & Poor 500 showed 30 of the 52 week highs and three new lows. The Nasdaq Composite, in contrast, posted 113 new highs. Three new lows were seen.