US stocks finished the week modestly higher following a mixed batch of corporate earnings reports, avoiding a major retreat that had been feared early in the period.
The Dow Jones Industrial Average edged 21.51 points (0.13 percent) higher to 16,458.56, while the broad-based S&P 500 advanced 6.27 (0.34 percent) to 1,838.70 and the tech-rich NASDAQ Composite Index rose 22.91 (0.55 percent) to 4,197.58.
Investors have been bracing for a correction of the surge in equity markets of last year. Such a retreat seemed like a real possibility on Monday when all three indices fell by more than 1 percent ahead of the peak earnings reporting period, but rallies on Tuesday and Wednesday positioned the market to finish the week in the black.
Analysts said that most of the week’s economic data showed that the US economy continues to recover at a moderate pace: Last month’s retail sales edged 0.2 percent higher, the US Federal Reserve’s Beige Book saw “moderate” growth in most of the country and a much-watched survey of New York state manufacturers reached its highest level in more than a year.
Analysts were more ambivalent about corporate earnings following a spate of releases from banks and other large financial institutions.
“It was mixed,” BTIG chief global strategist Dan Greenhaus said of the fourth-quarter earnings reports presented this week.
Most of the large banks reported higher year-on-year earnings, but there were enough unanswered questions and red flags to stop the sector rallying. Financials in the S&P 500 finished the week 0.5 percent lower.
JPMorgan Chase profits bested analyst expectations, but executives avoided any optimistic predictions about when the company’s costly legal problems would wind down.
Bank of America Corp and Morgan Stanley announced large new legal costs, while analysts fretted about weak trading results at Citigroup Inc and Goldman Sachs. Still, the industry’s tone remains generally positive about its prospects in light of the recovering US economy.
Analysts were more troubled by releases from retailers that keep suggesting a weak holiday season.
The worst came from Best Buy Co Inc, which lost more than one-third of its value after disclosing that domestic comparable store sales declined 0.9 percent from a year earlier during the holiday shopping period.
Women’s athletic clothes retailer Lululemon Athletica Inc slashed its earnings forecast on weak sales, while JC Penney Co Inc announced plans to close 33 stores and cut 2,000 jobs as part of its turnaround.
Among other headliners, General Motors Co announced its first corporate divided since its government rescue in 2008, but the news was tempered by a modest profit outlook for this year that left shares 3.6 percent lower for the week.
In merger and acquisition news, Google Inc announced plans to acquire Nest Labs in a deal valued at US$3.2 billion, while US healthcare service group McKesson Corp said its US$8.3 billion bid to take over Germany’s Celesio AG had failed.
Corporate earnings will again take center stage next week, with reports from firms such as IBM Corp and McDonald’s Corp expected.