From Fred Imbert: Stocks rose on Friday after a slew of positive corporate news that included strong bank earnings and Disney unveiling a new streaming service.
The Dow Jones Industrial Average surged 233 points. Gains in the financials and materials sectors pushed the S&P 500 0.4% higher. The benchmark broke above the key 2,900 level and stood just 1% from a record high. The Nasdaq Composite advanced 0.3%.
J.P. Morgan Chase kicked off the corporate earnings season on Friday by reporting better-than-expected results. The company said “impact of higher rates ” boosted its results, along with its fixed-income trading revenues. Wall Street cheered J.P. Morgan’s report, sending the stock up 4.8%.
“A solid 1Q19 beat should be good news for the shares of both JPM and its universal bank peers,” said Jeffery Harte, an analyst at Sandler O’Neill & Partners, in a note. We “specifically see a positive read through for universal bank peers from JPM’s FICC and debt underwriting revenue beats.”
Wells Fargo also reported better-than-expected results on the back of its consumer lending business, but the stock erased earlier gains as the bank’s CFO issued a tepid outlook for net interest income.
Investors came into the season expecting it to be a tough one for companies. FactSet expected first-quarter earnings to have fallen 4.2% in the first quarter.
Disney shares added to the gains, rising more than 10% after the media giant unveiled a streaming service at a lower price point than Netflix. Shares of Netflix, meanwhile, dipped 2.9%.
Sentiment was also boosted on Friday by a massive deal in the energy sector. Dow member Chevron announced plans to acquire Anadarko Petroleum for $33 billion in cash and stock. The deal values Anadarko at a 37% premiumfrom the stock’s close on Thursday. Anadarko shares jumped 32% while Chevron fell 5%.
“Investors have been clamoring for consolidation of the US oil patch in recent years (especially within the last year), so this very well may kick-start M&A activity in the space on a larger scale,” wrote Capital One Securities analyst Phillips Johnston. “We think the deal has positive implications for other Permian players with a large acreage footprint.”
Friday’s gains put the S&P 500 on pace for its third consecutive weekly gain. On top of Friday’s deluge of corporate news, investors digested the release of the Federal Reserve’s minutes from its March meeting as well as further progress on U.S.-China trade talks.
The SPDR Dow Jones Industrial Average ETF (DIA) was trading at $263.91 per share on Friday afternoon, up $2.51 (+0.96%). Year-to-date, DIA has gained 7.57%, versus a 9.06% rise in the benchmark S&P 500 index during the same period.
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