S&P 500 closes near record high as earnings season gets off to a good start

By Stephen Culp

NEW YORK (Reuters) – The U.S. stock market closed near record highs on Friday after the largest U.S. bank, JPMorgan Chase & Co., calmed concerns that the first-quarter earnings season would undermine Wall Street’s big recovery from last year’s crisis.

The S&P 500 has now come within one percentage point of its September closing record, and the S&P 500 total return index, which includes reinvested dividends, has actually regained record levels, recouping losses from a devastating year-end sell-off that pushed the benchmark index into the bear market’s rounding error zone.

Since then, the three major indexes have posted their best quarterly profits in nearly a decade in the first quarter, but have spent April awaiting the first-quarter earnings season.

JPMorgan, effectively kicking off a quarterly earnings season that will dominate investor sentiment in the coming weeks, beat analyst estimates, easing concerns that slowing economic growth could weigh on its results. Its shares rose 4.7% and led a broad rally in banking stocks.

“JPMorgan’s earnings are important because their business touches a broad swath of the economy,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “They’re a proxy for other corporate earnings.”

Analysts are now expecting S&P 500 companies to post a 2.3% year-over-year decline in earnings, a slight improvement from the last reading, according to Refinitiv data. However, first-quarter earnings still posted their first annual decline since 2016.

However, of the 29 S&P 500 companies that have published their reports so far, 79.3% reported results that exceeded analysts’ expectations.

Walt Disney Co. shares rose 11.5% to an all-time high, giving the Dow Jones and S&P 500 the biggest boost after the pricing of its upcoming streaming service was set.

Rival streaming service Netflix Inc. fell 4.5%.

Both the Nasdaq and Dow Jones are currently about 1.5% below their previous record highs.

This week, the S&P 500 and Nasdaq indices posted their third consecutive gains, while the Dow Jones posted a symbolic weekly loss.

The Dow Jones Industrial Average rose 269.25 points, or 1.03%, to 26,412.3, the S&P 500 gained 19.09 points, or 0.66%, to 2,907.41 and the Nasdaq Composite rose 36.81 points, or 0.46%, to 7,984.16.

Of the 11 major sectors in the S&P 500, all but healthcare ended the session higher.

The largest percentage increase was recorded by financial companies, which rose 1.9% thanks to JPMorgan Chase results.

Healthcare stocks continued to fall, with UnitedHealth Group down 5.2%, Anthem Inc down 8.5% and Humana Inc down 2.8%. The S&P 500 Healthcare Index fell 1.0%.

In the largest energy deal since 2016, Chevron Corp. said it will buy Anadarko Petroleum Corp. for $33 billion in cash and stock.

Chevron shares fell 4.9% following the announcement, while Anadarko shares rose 32.0%.

Boeing Co. shares rose 2.6% as the plane maker’s stock rebounded from a recent sell-off.

The CBOE Volatility Index, Wall Street’s so-called “fear gauge,” fell to a six-month low on Friday, a signal that investors expect the bull market to continue.

On the NYSE, advancing stocks outnumbered declining stocks by a ratio of 1.86 to 1; on the Nasdaq the ratio was 1.31 to 1, favoring gaining stocks.

The S&P 500 Index posted 60 new 52-week highs and 3 new lows; the Nasdaq Composite Index posted 95 new highs and 38 new lows.

Trading volume on U.S. exchanges was 6.75 billion shares, compared with the average of 6.97 billion over the past 20 trading days.

(Reporting by Stephen Culp; additional reporting by Saqib Ahmed; editing by Susan Thoma)