US markets turned in their third straight week of gains on Friday with the S&P 500 and the Dow clawing up to their best closing levels in five years.
Activity was hedged by a mixed batch of earnings, but the heavyweight banks — with the exception of Citigroup Inc — underpinned the week’s gains with their steady-or-better earnings.
Also helping was General Electric Co’s slightly better-than-expected quarterly earnings report on Friday, and its expectations of a better year this year, which drove the US industrial powerhouse and Dow component to a 4.3 percent gain for the week.
By the end of trading on Friday, the S&P 500 finished at its highest level since Dec. 26, 2007, closing up 0.95 percent for the week at 1,485.98.
The Dow Jones Industrial Average hit its best since Dec. 10, 2007, rising 1.19 percent 13,649.70.
The NASDAQ also eked out a gain for the week, rising 0.28 percent, but was held back by Apple Inc’s fall caused by worries over iPhone sales and a bad quarterly report from Intel Corp on Friday.
IHS Global Insight’s Nigel Gault and Paul Edelstein said that of the 40 S&P 500 companies reporting, 29 beat forecasts that were already depressed, not unlike recent quarters.
“The results have so far been good enough to prevent a sell-off in equities, but haven’t nudged stocks higher,” they said.
The weekly gains came more from a handful of economic reports, including a steep drop in unemployment claims and a rebound in housing starts last month, they added.
Also helping hold the floor was China’s report of better-than-expected fourth-quarter economic growth, which came in at 7.9 percent, “indicating that China’s economy is on the mend and has likely avoided a hard landing,” they said.
Most major financial institutions reported during the week, with a mix of indications about where the industry was going: Losses were down, but margins did not improve overall and huge mortgage-related settlements still weighed.
“The losses have been coming down as the economy has been stabilizing,” Guggenheim Partners analyst Marty Mosby said.
“It is the more super-regional banks that have done well, versus the much larger global banks like Citibank and Bank of America,” S&P Capital IQ’s Sam Stovall said. “But other banks like PNC, BB&T Corporation and Wells Fargo and even JPMorgan Chase have done better.”
Morgan Stanley was the uber-performer of the large banks, adding 11 percent for the week, while Bank of America sagged 4.2 percent.
The global grounding of Boeing Co’s 787 weighed on the market, but investors seemed ready to give the company the benefit of the doubt, as the shares gave up only 0.2 percent over the five sessions.
Looking ahead, Fred Dickson of DA Davidson cautioned over the coming weeks of fourth-quarter earnings releases.
“Corporate earnings and revenue guidance remains very cautious regarding first quarter and full year 2013 following a quarterly trend that extends back several quarters,” he said.
The coming trading week will be shortened by the Martin Luther King US national holiday tomorrow, which will also see US President Barack Obama inaugurated in Washington for his second term.
Economic data will be focused on last month’s new and existing home sales.
Among companies reporting earnings on Tuesday will be Google Inc, DuPont Co, Johnson & Johnson and IBM Corp, while Apple, McDonald’s Corp, United Technologies Corp and 3M Co are to report on Wednesday, and Microsoft Corp and Lockheed Martin are to report on Thursday.