Markets Right Now: Solid gains for stocks in early trading

Marco Green
April 15, 2019

The Nasdaq and the Dow are both about 1.5 per cent below their previous record highs.

Banks led the gains after a solid quarterly profit report from JPMorgan Chase opened the latest round of highly anticipated company earnings. Banks have been benefiting from higher interest rates, which allow them to book fatter profits from making loans.

Disney soared after unveiling a new video streaming service to go up against Netflix, the industry leader. Disney will be going head-to-head with Netflix, which declined.

ANALYST'S TAKE: The market is coming off a wobbly week as investors anxious that the early first-quarter earnings reports would come in even weaker than the low expectations analysts already have.

Banks are leading the way higher Friday.

"In general, you need to have the financial companies participate in order for a market advance to continue", Stovall said. Other banks also rose.

The broad-based S&P 500 advanced 0.7 per cent to 2,907.41, its first close above 2,900 in more than six months, while the tech-rich Nasdaq Composite Index climbed 0.5 per cent to 7,984.16.

The Dow Jones Industrial Average surged more than 1%, 269 points higher, to close at 26,412.3. The average still finished slightly lower for the week.

At the small-cap level, the Russell 2000 ticked up 5 points to 1,584.1, and the S&P Smallcap 600 gained 0.3% to 970.3.

Petroleum prices rose 4.7% last month, slowing from February's 9.7% gain and industrial supplies and materials increased 2.7%.

However, investors are hoping that the earnings season will be better than feared, helping the USA indexes reach all-time highs.

European stock markets were also all stronger at the close, with many banking stocks getting a lift from their U.S. counterparts. Health care was the only sector to lose ground.

Stocks have been in a holding pattern ahead of the first-quarter earnings season, which many analysts say could be the first quarterly drop in S&P 500 profit since 2016.

New York-listed shares of Fiat Chrysler rose 3.1% after its chairman provided an upbeat outlook for the full year.

Investors will be focusing during the next few weeks on company earnings reports in hopes of gleaning clues about the trajectory of the US economy and corporate profits. Citigroup, UnitedHealth Group and Johnson & Johnson are among the larger companies releasing results next week. The S&P 500 is just 1.3% away from a record high hit in September. The expected drop in profits is nearly entirely because of weaker profit margins.

JPMorgan topped street expectations for the first quarter, giving investors a shot of confidence that lasted through the day.

Wrong-footing financial sector watchers who had warned of a "not that great" earnings season for banks, JP Morgan reported higher first-quarter profits on Friday, pointing to a still-solid U.S. economy reflected in more lending and better profit margins on loans.

Wells Fargo wrapped up the week 2.64% lower despite its first-quarter numbers seeing net income climb 14% year-on-year on the back of cost-cutting exercises and a lower than expected drop in revenues. The stock fell 2.6 percent.

JPMorgan and Wells Fargo's latest results show that higher interest rates during the quarter drove increases in revenue.

The S&P 500 index rose 18 points, or 0.6%, to 2,906.

Disney ended a lucrative licensing relationship with Netflix in order to create the streaming service.

Disney, meanwhile, was the shining star of the blue chips after the company announced its steaming service, Disney+, would debut on November 12 for $6.99 a month. The move sent its chief rival Netflix (NASDAQ:NFLX) down almost 4%.

STREAMING MOUSE: Disney surged 10.9% after it released plans to offer a streaming entertainment service.

Chevron sank 4.6% after announcing a deal to buy Anadarko Petroleum for $33 billion.

Bond prices fell sharply, sending yields higher. Anadarko skyrocketed 32.5% higher. Chevron was one of the few decliners in the sector.

Energy futures closed mostly higher.

Economists polled by Bloomberg had expected a slight 0.2 percent rise in imports with exports projected to grow 6.5 percent.

The dollar rose to 112.08 yen from 111.66 yen on Thursday.

Other reports by Click Lancashire

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