By Sruthi Shankar
(Reuters) – U.S. stocks eked out gains to hit fresh record highs on Tuesday, as stronger-than-expected earnings from JPMorgan and Citigroup added to optimism about the domestic economy ahead of the imminent signing of a U.S.-China trade deal.
Kicking off the fourth-quarter earnings season, the largest U.S. bank JPMorgan Chase & Co (N:), rose 1.9% after reporting a better-than-expected profit on strength in its trading and underwriting businesses, helping the blue-chip Dow index outperform.
Wells Fargo & Co (N:) dropped 4.2% after reporting a slump in profit, as it set aside $1.5 billion for legal expenses, while Citigroup Inc (N:) rose 2.7% as it topped Wall Street profit estimates.
The S&P 500 banks index was up 0.8%.
“It (bank earnings) is reflective of where we are in the economic cycle,” said Mike Loewengart, vice president of investment strategy at E*TRADE Financial Corp.
“We’re coming off a decade of consistent gains and banks, especially JPMorgan producing record earnings, it’s not surprising given the strength of the U.S. economy.”
Analysts expect profits at S&P 500 companies to drop 0.5% for the second consecutive quarter, according to Refinitiv IBES data, largely due to a drag in energy and industrial earnings that have been hit by a prolonged Sino-U.S. trade war.
China has pledged to buy nearly an additional $80 billion of manufactured goods from the United States over the next two years, and over $50 billion more in energy supplies, Reuters reported, citing a source briefed on the Phase 1 trade deal that is expected to be signed on Wednesday.
However, checking gains on Wall Street were technology and internet stocks that took the main indexes to record highs in the previous session. Amazon.com Inc (O:), Apple Inc (O:), Nvidia Corp (O:) and Facebook Inc (O:) shed between 0.8% and 1%.
At 1:12 p.m. ET the Dow Jones Industrial Average () was up 128.94 points, or 0.45%, at 29,035.99, the S&P 500 () was up 3.94 points, or 0.12%, at 3,292.07 and the Nasdaq Composite () was up 13.27 points, or 0.14%, at 9,287.20.
Delta Air Lines Inc (N:) rose 3.6% after reporting a better-than-expected quarterly profit, boosted by customers gained from rival airlines’ 737 MAX cancellations. The S&P 1500 airlines index rose 2%.
Advancing issues outnumbered decliners for a 1.69-to-1 ratio on the NYSE and a 1.84-to-1 ratio on the Nasdaq.
The S&P index recorded 58 new 52-week highs and no new low, while the Nasdaq recorded 148 new highs and 23 new lows.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.