Dow, S&P 500 Maintain Winning Ways

NEW YORK ( TheStreet) -- Stocks finished with solid gains Friday as better-than-expected earnings from JPMorgan Chase ( JPM) lifted financials and reawakened earnings momentum seen earlier in the week.

The Dow Jones Industrial Average rose by 54 points, or 0.5%, to close at 11,786, within shouting distance of a session high of 11,794. The S&P 500 gained 9 points, or 0.7%, to settle at 1293, and the Nasdaq Composite finished ahead by 20 points, or 0.7%, to close at 2755.

The Dow and S&P 500 have now gained ground for seven consecutive weeks. This week, the Dow rose 0.9%, the S&P 500 shot up 1.7%, and the Nasdaq was the biggest winner, surging nearly 2%.

Shares of JPMorgan Chase gained 1% to $44.91 after the bank beat Wall Street's expectations with fourth-quarter earnings of $1.12 a share and sales that rose 13% from last year to $26 billion. Analysts had been projecting a profit of 99 cents on revenue of $24.4 billion.

Bank of America ( BAC), American Express ( AXP) and JPMorgan Chase were the Dow's biggest percentage gainers, and the Financial Select Sector ETF ( XLF) rose 1.6% to $16.72. Twenty-one of the Dow's 30 components finished Friday in the green.

Merck ( MRK), Johnson & Johnson ( JNJ), Intel ( INTC), and Verizon Communications ( VZ) were among the Dow's biggest laggards.

The New York Stock Exchange saw 1 billion shares changing hands, while close to 2 billion shares were traded on the Nasdaq. Market breadth was weighted slightly to the positive, with 58% of shares on the NYSE gaining ground while 39% declined.

Late Thursday, Intel reported fourth-quarter earnings of 59 cents a share, beating Wall Street's consensus view by 6 cents. Sales of $11.5 billion also exceeded expectations. The stock, however, closed 0.9% lower at $21.08.

BP ( BP) announced a share-swap agreement with Rosneft, a Russian state-controlled oil company, after the bell on Friday. Shares gained 3.6% to $49.25 ahead of the report.

Shares of chip-equipment maker Nanometrics ( NANO) jumped 28.7% to $17.32 after Piper Jaffrey issued a positive outlook for the company amid a super cycle in chip equipment.

Rare-earth oxide producer Molycorp ( MCP) is competing for federal loan guarantees to support its development of rate-earth mining and manufacturing projects , according to Bloomberg. The stock plunged 6% at $46.13.

Gold prices took a beating as central banks in emerging markets took actions to limit inflation and after Federal Reserve Chairman Ben Bernanke said he expects the U.S. economy to grow between 3% and 4% on Thursday. The February gold contract shed $26.50 to settle at $1,360.50 an ounce.

A day after South Korea raised key interest rates, the People's Bank of China raised banks' required reserve levels for the seventh time since early 2009 in its continued effort to cool growth.

The news weighed on basic materials, making it the session's worst-performing sector. Newmont Mining ( NEM) dropped 1.9% to $55.72.

Friday's session brought a deluge of economic releases, and consumer-related data came in largely weaker than expected. Consumer sentiment fell to 72.7 in January, from December's level of 74.5, according to the University of Michigan's preliminary estimate. The number missed expectations for an index reading of 75.5, according to Briefing.com.

Retail sales increased 0.6% in December, according to the Commerce Department's report, just missing expectations for growth of 0.7%. December's growth compares with an increase of 0.8% in November. Excluding autos, sales gained 0.5%, coming in slightly below Wall Street's calls for a 0.6% uptick. In November, retail sales, excluding autos, jumped 1%, which was downwardly revised from an initially reported surge of 1.2%.

In a recent note, PNC Chief Economist Stuart Hoffman warned that continued growth in retail sales would depend on the labor market.

"We will need to see stronger job creation to support ongoing gains through 2011," he said, adding, "Recent positives for consumer spending are a rising stock market, slowing deleveraging, a stable saving rate, increasing consumer confidence and an unexpected tax cut. These, combined with a great deal of pent-up demand, have reignited consumer spending, but it will take the more substantial fuel of job creation to keep the retail fires burning."

Consumer prices ticked up 0.5% in December after a rise of 0.1% in November, the Labor Department said. According to Briefing.com, economists had projected an increase of 0.4%. Excluding volatile food and energy prices, the core rose 0.1%, as expected, and after similar growth the previous month.
Retail

Jim Baird, partner and chief investment strategist for Plante Moran Financial Advisors, said higher energy prices drove December CPI up but that most analysts believe oil prices would have to increase further to have a substantially negative impact on the economy. Meanwhile, the core rate remains below the Fed's target range of 1.5% to 2%.

"It was undesirably low inflation, coupled with high unemployment and the lackluster recovery that gave the Fed their justification for the second round of quantitative easing. Although growth appears to be picking up, there is still very little reason to be concerned about rising prices outside of energy costs, which soared in December," he said.

In other economic news, industrial production and capacity utilization grew by more than expected in December, according to data from the Federal Reserve. Industrial production gained 0.8%, topping forecasts for growth of 0.4%, and capacity utilization jumped to 76%, exceeding the 75.5% reading that economists had expected. In November, industrial production rose 0.3% and capacity utilization came in at 75.4%.

The Commerce Department said business inventories inched 0.2% higher in November after rising 0.8% in October. Wall Street had projected an increase of 0.8%.

The February crude oil contract gained 14 cents to settle at $91.54 a barrel.

The dollar slipped against a basket of currencies, with the dollar index down by 0.1%. The benchmark 10-year Treasury note fell 5/32, lifting the yield to 3.321%.

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Hong Kong's Hang Seng added 0.2% while Japan's Nikkei fell 0.9%. London's FTSE was shed 0.4% while the DAX in Frankfurt finished 0.01% higher.

-- Written by Melinda Peer and Shanthi Bharatwaj in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.