The Dow Jones Industrial Average
Excluding auto and parts sales, retail sales increased at a pace of 0.7% during December, significantly ahead of the 0.4% expected by economists. These sales were 3.7% higher than in 2012.
"Any way you slice it, headline sales, headline sales ex autos or headline sales ex autos and gasoline rose just 0.4-0.5% on average throughout the final quarter of the year compared to a 0.2-0.4% pace in Q3, hardly the gangbuster level anticipated to keep upward momentum in GDP from third quarter's impressive pace. A loss of momentum in consumer spending, coupled with a reduction in inventory is likely to translate into sub-2% GDP at the end of 2013 schedule to be released January 30," wrote Sterne Agee chief economist Lindsey Piegza on Tuesday in a note to clients..
This sort of "bad news" is good news for the broad market when the economy is growing and short-term interest rates are close to zero. As a group, investors prefer to see the Federal Reserve keep the short-term federal funds rate in its current range of zero to 0.25% as long as possible.
The KBW Bank Index (I:BKX) on Tuesday rose 0.5% to 70.20 with all but three of the 24 index components ending higher.
Bank Earnings Begin
JPMorgan Chase (JPM) kicked off earnings season by reporting fourth-quarter earnings of $5.3 billion, or $1.30 a share, slightly below the consensus EPS estimate of $1.35, among analysts polled by Thomson Reuters.
While the results were disappointing in some respects, JPMorgan reported a respectable return on tangible common equity (ROTCE) of 14%, down from 15% a year earlier. Most of the legal settlements the company entered into during the fourth quarter -- including $17.5 billion in residential mortgage-backed securities settlements with government authorities an investors -- had previously been reserved for. But the fourth-quarter after-tax results, as previously announced, were lowered by lowered by $850 million, as a result of the bank's $2.6 billion settlement with the Department of Justice and regulators over its role in the Bernard Madoff Ponzi Scheme.
JPMorgan's shares were up a nickel to close at $57.76.
Please see TheStreet's earnings coverage for much more on JPM's fourth-quarter results and the company's outlook for 2014.
Wells Fargo (WFC) reported fourth-quarter earnings of $5.6 billion, or a dollar a share, beating the consensus EPS estimate of 98 cents and rising from 99 cents the previous quarter and 91 cents a year earlier. The company's earnings for all of 2014 totaled a record $21.9 billion, or $3.89 a share, making Wells Fargo the nation's most profitable bank.
Wells Fargo's full-year earnings were up 16%, as declining credit costs and lower expenses more than offset a large decline in mortgage banking income and a slight decline in net interest income.
Wells Fargo's shares were unchanged at $45.56.
In light of the significant rise in long-term interest rates during 2013, which lead to a great curtailment of the wave of mortgage refinance application, the Mortgage Bankers Association on Tuesday lowered its forecast for 2014 one-to-four family mortgage loan originations by $57 billion to $1.2 trillion. To put that full-year forecast into perspective, the MBA estimates mortgage loan originations totaled $1.755 trillion during 2013, declining from $2.044 trillion during 2012.
Next: Bank of America
Bank of America will announce its fourth-quarter results early Wednesday, with analysts estimating earnings of 27 cents a share, down from 28 cents the previous quarter and 29 cents a year earlier.
Please see TheStreet's earnings preview for more on what to from Bank of America, including the company's massive cost-cutting program.
This chart shows the performance of JPMorgan Chase, Wells Fargo and Bank of America against the KBW Bank Index and the S&P 500 since the end of 2011:
data by YCharts
-- Written by Philip van Doorn in Jupiter, Fla.
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