Blockbuster earnings for Bank of America on Monday and JP Morgan Chase on Friday.
The market is putting under the rug the geopolitical worries over Syria, Russia and China.
The three main indices ended the day in positive territories as the market focuses on the earnings season and is somewhat re-assured that the strike on Syria is a one-time event and not the start of a prolonged war.
The S&P 500 index gained 25 points or 1% to 2,682 and is just below its 50-period simple moving average. The index came back into positive territories for the year.The Dow Jones Industrial Average (DJIA) rose 243 points or 1% and reached 24,603 while the Nasdaq Composite Index climbed 59 points or 0.8% to 7,166 in Monday’s trading.
All the of the eleven main sectors of the S&P 500 were higher on the day and eight of them increased by at least 1%. The VIX (CBOE Volatility Index) which measures fear in the market dropped 5%, one of its worst daily decline since the start of April.
Corporate earnings are currently the main market driver. Bank of America reported earlier on Monday with stellar earnings. Netflix and General Electric will be reporting their earnings in the coming days.
“America’s second-largest bank hauled in $6.9 billion in profit during the first three months of 2018. That’s the biggest quarterly profit in Bank of America’s history, taking out the previous record set in 2011. The blockbuster earnings are at least partly because of President Trump’s corporate tax cuts.”
according to CNN Money.
Earlier on Friday, JPMorgan Chase (JPM), the biggest US bank, saw its earning leap 35%. The $8.7 billion in profits was the largest ever recorded by any US bank in history, according to S&P Global Market Intelligence.
On the geopolitical tensions, it turned out that US investors have largely shrugged-off the US strike on Syria. Last week the Syrian regime allegedly perpetrated an attack with chemical weapons which are forbidden by international laws. On Saturday, the US along with UK and France retaliated by firing over 100 missiles on three targets: a storage facility, a research center as well as an equipment facility and command post. Uncertainties now weigh over potential Russian sanctions. However, the stock market seems to have priced in that as well and is currently more inclined to focus on the earnings season.
“Investors already know that earning will be good and at this point looking at guidance from companies. The next couple of weeks will be important because many companies from different sectors will report. Markets will remain volatile intraday on the days there is political news. Today we have Michael Cohen [Trump’s personal lawyer] appearing in court and would not be surprised to see some volatility because of that,” commented Quincy Krosby, chief market strategist at Prudential Financial.
Earlier in the day, the Retail Sales data increased 0.6% in March confirming economic expansion and improving conditions for the American household.
Meanwhile, President Trump is set to nominate Richard Clarida as Fed Vice Chair.
S&P500 Index daily chart
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