(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