US stocks closed higher on Friday, with the Nasdaq basking in a fresh record high, but the Dow’s attempt at the 20,000 was a non-starter.
Bank earnings were the main driver of the gains, but some industrials left their mark to the downside, helping deny the Dow a fresh high after it initially came within 50 points of clinching it.
The S&P 500 ended the last day of the week with a 0.2% gain, bringing it to 2,274 thanks to a strong performance from financials, which outpaced other major sectors to gain 0.55% on the back of a crop of earnings from the likes of JPMorgan (NYSE:JPM) up 0.5% to $86.70 and Bank of America (NYSE:BAC) up 0.4% to $23.01.
But it was Netflix Inc (NASDAQ:NFLX) which offered the highest gains of the S&P 500 on Friday. The video streaming service ended up 3.6% at $133.81 ahead of its earnings report next week. Investors sense that with US President-elect Donald Trump seemingly not looking to pick a fight with the tech sector, the service may do well.
The Dow Jones Industrial Average spent another week hovering close to the 20,000 mark. But it ended flat at 19,885.
The best news was from the Nasdaq Composite, which finished the week with a 0.5% gain after touching a new intraday record high earlier in the day of 5,584.26. It closed at 5,574.12, the latest in a run of record closing highs set by the tech-heavy index already this year.
But shares in Fiat Chrysler (NYSE:FCAU) extended falls on Friday after the Italian-American car maker said it is in discussions with the US Department of Justice over allegations of cheating in diesel emissions tests.
The company was accused by the US Environmental Protection Agency on Thursday of failing to declare software that controls the pollution of its diesel engines.
New York-listed shares fell 4% on Friday initially after the company said it was being investigated by the US Department of Justice as well as the EPA. The company’s US-listed shares fell more than 10% the day before, when the EPA action was announced.
Shares ended down 2.2% at $9.73.
The S&P Midcap 400 closed up 0.5% at 1687 and led by industrial materials group Timken Company (NYSE:TKR), up 3.2% to $44.20, while the S&P Smallcap 600 closed up 0.8% at 839 and led by Century Aluminum (NASDAQ:CENX) up 11.2% to $11.52.
On Thursday, Century Aluminum Company's President and Chief Executive Officer Michael A. Bless commended the US Trade Representative's announcement that the United States has requested World Trade Organization consultations with China regarding the Chinese government's illegal subsidisation of its aluminum industry.
The wider small-cap Russell 2000 closed up 0.8% at 1361 and led by oil and gas company Sanchez Energy Corp (NYSE:SN) up 29.2% to $11.24.
In Toronto, the TSX Composite closed the session up 0.5% at 15,497 and led by Empire Company Ltd. up 7.7% to C$16.72.
Early trading
US stocks opened higher on Friday, with no hint of the Friday the 13th blues, as banking stocks advanced and the Nasdaq Composite posted a fresh record high.
After a series of record milestones since last November, the tech-heavy Nasdaq index managed to edge higher to a fresh high of 5,580.28 on Friday, 16 points clear of its previous high struck on Tuesday. The Nasdaq was last up 0.5% at 5576.
The Dow Jones Industrial Average didn’t fair quite so well. Having risen to within 48 points of clinching a record at 20,000 – it just missed out on that title last week - the Dow was now up just 0.07% at 19.904.
The S&P 500 market bellwether was up 0.3% at 2276 and led by First Solar Inc (NASDAQ:FSLR), up 3.4% to $36.06.
But it was banks stealing the show this session. After Federal Reserve chair Janet Yellen’s remarks which appeared to open the door to further rate hikes this year, as well as buoyant fourth quarter earnings from some of the United States’ leading banks, the sector was the top performer.
Although lower pre-market, Bank of America (NYSE:BAC) staged a turnaround in early trade and was up 1.3% at $23.21 – helping boost the S&P 500 Financials index initially by 1.5%. It was last up 1.2% at 393.20. But still the day’s top performer.
Shares in JPMorgan (NYSE:JPM) hit a new record high of $88.17 after the US bank delivered a near-doubling of profit in the fourth quarter. The shares were last up 1.3% at $87.38.
But it was down-on-its-luck Wells Fargo (NYSE:WFC) which surprised the most. Despite last year’s scandal-hit bank repotting its second successive year of profit decline, Wells managed to see its shares jump an impressive 3% to $56.12 – the top gainer on the S&P Financial index.
The S&P Midcap 400 was up 0.8% at 1691 and led by semiconductors firm Synaptics Inc (NASDAQ:SYNA) up 4.6% at $55.20 and a major part of the Nasdaq’s gains this session. The stock had its “outperform” rating restated with price target of $75 by research analysts at Cowen and Company.
The S&P Smallcap 600 was up 1% at 841 and led by Gentherm Inc (NASDAQ:THRM) up 6.3% at $35.25. Barrington Research upgraded its broker consensus on shares of Gentherm giving the company a ‘Outperform’ rating. Barrington gave shares of Gentherm Inc a price target of 43 indicating a potential increase of 23.56% from its current price of 34.8.
Pre-Open
US stocks are set to open higher on Friday, powered by a slew of good news for banking stocks and Fed Chair Janet Yellen lending support with her rate-hiking comments too.
Yellen speaking overnight said she saw no obstacles to the US economic recovery – a blunted hint that she won’t stand in the way of more rate hikes to come this year. That’s a balm for the banking sector yearning for higher rates.
The S&P 500 market bellwether is expected to open up 0.06%, while the tech-heavy Nasdaq Composite could be sizing up for a possible fresh record high later in the session after jumping 0.1% at the open. The Dow Jones Industrial Average will muster a 0.07% gain.
Trading and investment banking delivered a near-doubling of profit in the fourth quarter at bank JP Morgan Chase (NYSE:JPM), helping the bank overcome a more lacklustre performance from its core retail unit.
Net income for JPMorgan’s corporate and investment banking division — easily the largest in the world by revenues — came to $3.4bn, up 96% from a year earlier, boosted by a surge in trading after the election in November of Donald Trump. JPM shares were up 0.2% at $86.40 pre-market.
BlackRock (NYSE:BLK), the world’s largest asset manager, said it would raise its quarterly dividend after reporting the largest net inflows of new client money in its history in 2016.
Reporting its fourth quarter and full year results, the New York-based company said that it had seen a total net inflow of $202bn in 2016, as its total assets under management rose by 11 per cent year on year to stand at $5.14tn. BlackRock shares were up 0.7% at $381 pre-market.
But not all banks were laughing all the way to the, er, bank. On the face of it, Bank of America (NYSE:BAC) had some cheery news that it is buying back an extra $1.8bn of its shares after high trading volumes and lower costs control drove an expectation-beating 48% rise in the bank’s fourth-quarter profits.
America’s third-largest bank by market value said it would now buy back $4.3bn of shares in the first half of the year, up from the $2.5bn it had earlier promised to buy.
However, BoA shares were lower by 0.7% at $22.76 pre-market on account of the bank reporting lower-than-forecast revenue of $20bn versus a forecast $20.7bn.
But Wells Fargo (NYSE:WFC) shares were the underperformer in their sector, falling by 0.5% to $54.24 after profits declined for a second year. Fourth quarter earnings fell short of analyst forecasts, a reminder that getting over the fake account scandal is not the only challenge facing the US bank.
Net income at the bank, the second most valuable in the country, fell 4.4% to $21.9bn in 2016 after a 1% decline the previous year.
Fiat Chrysler (NYSE:FCAU) shares might be higher in Milan on Friday, but New York is having none of it. The stock which lost 16% on Thursday in the wake of US President-elect Donald Trump’s talk about factories at home extended their loss by 2.6% to $9.69 pre-market.