Chevron to buy Anadarko Petroleum in $33 billion deal
U.S. stocks closed higher Friday after a series of strong bank earnings, led by JPMorgan, boosted confidence in the U.S. economy while the Dow Jones Industrial Average rose nearly 270 points.
The rise by the blue-chip gauge was paced by gains for shares of JPMorgan and Walt Disney Company, which rallied after the entertainment giant unveiled plans for its new streaming service.
How did the benchmarks fare?
The Dow Jones Industrial Average DJIA, +1.03% gained 269.25 points, or 1%, to end at 26,412.30, while the S&P 500 index SPX, +0.66% rose 19.09 points, or 0.7%, to finish at 2,907.41. The Nasdaq Composite Index COMP, +0.46%advanced 36.80 points, or 0.5%, to close at 7,984.16.
For the week, while the S&P 500 gained 0.5% and the Nasdaq added 0.6% while the Dow edged down 0.1%.
What drove the market?
Quarterly results from Dow component JPMorgan Chase & Co., which kicked off a new earnings season early Friday, were better than expected, while Wells Fargo & Co. also posted robust revenue and in-line earnings.
Strong bank earnings bolstered confidence in the underlying economy, and JPMorgan Chief Executive James Dimon further underscored this message, noting that, “Even amid some global geopolitical uncertainty, the U.S. economy continues to grow, employment and wages are going up, inflation is moderate, financial markets are healthy and consumer and business confidence remains strong.”
U.S. import prices rose sharply in March for the second straight month, the government said, though most of the 0.6% jump in March can be blamed on rising fuel prices.
The University of Michigan said its consumer sentiment index fell to 96.9 in April, below the 97.5 level economists polled by MarketWatch had expected.
The market also got a lift from trade data released by China that showed March exports rose 14.2% from a year earlier versus forecasts calling for a rise of 8.7% and after a sharp drop in February. That said, imports were flagging, reflecting soft domestic demand and the growth spurt in exports may not be sustained.
What were strategists saying?
“Company specific news from major Dow components is helping lift the market,” Bill Northey, senior investment director at U.S. Bank, told MarketWatch.
Nevertheless, it’s still too early to tell whether this earnings season will show most companies beating the low expectations analysts have set in the first quarter, he said. “This is all occurring in a an environment of slowing global growth,” Northey pointed out, adding that markets may have trouble moving significantly higher, unless management teams in the coming weeks provide reason for investors to believe earnings growth will be more robust in the second half of 2019.
Positive bank earnings, especially from the nation’s largest bank, JPMorgan, indicate a “resilient U.S. economy,” Tom Kennedy, head trader and portfolio analyst at New England Investment & Retirement Group, told MarketWatch.
“Strength in [JPMorgan’s] consumer franchise shows that despite the uncertainty in the fourth quarter of last year, consumers continue to spend and give strength to the overall U.S. economy,” he added.
“Chinese data looks to be the main driver of the gains on Friday. While we shouldn’t get too carried away with the numbers — February’s data is a clear reminder how volatile they can be this time of year — they are encouraging,” said Craig Erlam, senior market analyst at Oanda.
“Strong external demand combined with domestic stimulus measures will go some way to supporting the world’s second largest economy which will come as a relief to everyone,” he said.
Which stocks were in focus?
Shares of Walt Disney Co. DIS, +11.54% rallied 12%, helping to fuel the Dow’s rise, after the entertainment giant said it would launch its Disney+ video-streaming business on Nov. 12 for $6.99 a month or $69 a year.
Shares of video-streaming giant Netflix Inc. NFLX, -4.49% fell 4.5% in the wake of Disney’s announcement.
Shares of JPMorgan Chase JPM, +4.69% rose 4.7% for their best earnings day since the release of second quarter 2012 results.
Shares of Wells Fargo WFC, -2.62% fell 2.6% even after the bank beat revenueestimates for the first quarter.
PNC Financial Services Group Inc. PNC, +3.09% shares rose 3.1% after the regional bank reported first-quarter results that met expectations.
Oil giant Chevron Corp. CVX, -4.94% said it planned to acquire Anadarko Petroleum Corp. APC, +32.01% in a cash-and-stock tie-up valued at $33 billion or $65 a share. Shares of Dow-component Chevron declined 4.9%, while Anadarko shares surged 32% on the takeover bid.
How were other assets trading?
Hong Kong’s Hang Seng Index HSI, +0.24% gained 0.2%, while the Shanghai Composite Index SHCOMP, -0.04% ended with a slight loss of less than 0.1%. Japan’s Nikkei 225 NIK, +0.73% rose 0.7%. European stocks, meanwhile, saw muted moves, with the Stoxx Europe 600 SXXP, +0.16% up 0.2%.
In commodities markets, the price of oil CLK9, +0.28% rose after declining on Thursday in the wake of a monthly report from the International Energy Agency, while gold futures GCM9, +0.02% settled higher. The U.S. dollar DXY, -0.32%declined against peers.