The S&P 500 moved higher on Friday, even as the Dow Jones Industrial Average declined, as financials benefited from better-than-expected earnings from Bank of America (BAC - Get Report) and JPMorgan Chase (JPM - Get Report) .
The S&P 500 was up 0.12%, and the Dow fell 0.12%. The Nasdaq rose 0.4% after hitting intraday records earlier in the session
Losses on the Dow weren't industry specific. Losses were seen in retail and consumer stocks including Walmart (WMT - Get Report) and Apple (AAPL - Get Report) , tech company IBM (IBM - Get Report) and chemicals company DuPont (DD , among others.
Bank of America's profit surged 43% in the fourth quarter as a surprise rally in equities over the last two months in 2016 translated into increased trading revenue. Earnings increased to 40 cents a share from 27 cents a year earlier and came in higher than consensus of 38 cents a share. However, adjusted revenue of $20.22 billion came in slightly weaker than expected as analysts forecast revenue of $20.85 billion. Trading revenue rose 11% to $2.91 billion.
JPMorgan breezed past earnings estimates in its fourth quarter, posting profit of $1.71 a share, up from $1.32 a share in the year-ago quarter. Analysts anticipated per-share earnings of $1.42. Revenue of $24.33 billion exceeded estimates of $23.91 billion. Revenue from trading bonds, currencies and commodities rose 31% to $3.37 billion, "reflecting broad-based strength across products," the New York-based lender said in a statement.
PNC Financial Services (PNC - Get Report) also beat earnings expectations thanks to an increase in revenue. The bank earned $1.03 billion over the revenue quarter, up from $1.01 billion a year earlier. Earnings of $1.97 a share exceeded forecasts of $1.84. Revenue crept 0.5% higher to $3.87 billion, in line with analysts' estimates. Net interest income grew 2%.
Wells Fargo (WFC - Get Report) reported a weaker-than-expected fourth quarter. The bank earned 96 cents a share, 4 cents weaker than expected. Revenue of $21.6 billion was unchanged from a year earlier and missed consensus of $22.448 billion. Shares rose 1%.
Other financial stocks joined in on the rally, including Citigroup (C - Get Report) , Goldman Sachs (GS - Get Report) and Morgan Stanley (MS - Get Report) . The Financial Select Sector SPDR ETF (XLF - Get Report) rose 0.66%. The ETF rose to near its best closing high in nine years earlier in the session.
Stocks have been in rally mode since Trump's unexpected win in November. Investors have bet big on Trump's proposed infrastructure spending and on hopes of a rollback in regulations on Wall Street. The Dow, in particular, has benefited from Trump's win, rocketing to new records and nearly touching the psychologically significant 20,000 milestone.
Banking stocks succeeded Alcoa as the traditional kickoff to the earnings season after the aluminium producer separated into two companies. Average earnings for the S&P 500 in the fourth quarter are expected to increase 6.1% from the same period a year earlier, according to Thomson Reuters. Earnings growth would mark the second straight quarter of gains after the third quarter broke an earnings recession that lasted for four consecutive quarters. The third quarter also ended a revenue recession that had lasted since the fourth quarter of 2014.
Crude oil prices held lower on Friday afternoon despite a welcome decline in the number of active oil-drilling rigs in the U.S. The number of active oil rigs in the U.S. fell by 7 to 522, according to Baker Hughes data. The decline was the first in 11 weeks.
West Texas Intermediate crude closed down 1.2% at $52.37 a barrel on Friday afternoon.
Consumer sentiment weakened in January, according to the latest reading from the University of Michigan. Sentiment fell to 98.1 from a final reading of 98.2 in December and below consensus of 98.6. A metric on current conditions climbed to 112.5, while expectations slid to 88.9 from 89.5 in December.
U.S. retail sales in December came in weaker than expected, backing up retailers' recent testimonies of a disappointing holiday season. Sales rose 0.6% last month, slightly worse than an expected 0.7% increase. Excluding gas and automobiles, sales rose 0.2%, more than half the expected increase.
"There was a larger downside miss in the core sales group..., indicating that the surge in consumer sentiment since the election along with the holiday season did not translate into a pronounced increase in December spending," said Brittany Baumann, macro strategist at TD Securities.
Producer prices in the U.S. rose 0.3% in December, the Labor Department reported Friday. The increase was as analysts expected. On a yearly basis, producer prices increased 1.6%, its best gain since September 2014.
GameStop (GME - Get Report) shares fell 9% after the company reported a disappointing holiday season. Sales over the critical shopping months slid 16.4% to $2.5 billion, while holiday same-store sales declined 18.7%. The video game retailer said it still anticipates fourth-quarter earnings between $2.23 and $2.38 a share, though expects fourth-quarter same-store sales to decline by as much as 18%.
Shares of Pandora (P rose almost 7% following upbeat fourth-quarter guidance and after it said it would cut about 7% of its workforce.