Wall Street inches to fresh record after upbeat JPMorgan, Citi results

(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.

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., January 13, 2020. REUTERS/Brendan McDermid

Kicking off the fourth-quarter earnings season, the largest U.S. bank JPMorgan Chase & Co (JPM.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 (WFC.N) dropped 4.2% after reporting a slump in profit, as it set aside $1.5 billion for legal expenses, while Citigroup Inc (C.N) rose 2.7% as it topped Wall Street profit estimates.

The S&P 500 banks index .SPXBK 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

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