As I’ve mentioned a number of times in recent weeks, investors have been on the fence awaiting the results of Q1 earnings since there’s been a general pessimism that Q1 will see a contraction for the first time in three years.  Well, today Q1 got a huge boost when JP Morgan Chase issued a glowing earnings report that far exceeded the forecast, giving not only a big 1.9% boost to the entire financial sector but a whopping 269 point boost to the Dow since JP Morgan is so important it is considered a bellwether for the rest of Q1 and the economy as a whole.  Today, investors’ fears of slowing economic growth and impending recession were allayed.  The S&P is now within a mere percentage point of its September record high and in this one day alone the forecast for Q1 has been reduced from a 2.5% contraction to a 2.3% contraction.  As more than 79% of reporting companies have exceeded forecasts, this contraction estimate will almost certainly continue to shrink.  With today’s boost, both the Nasdaq and Dow are now a mere 1.5% below their all-time record highs, the VIX has fallen to a 6-month low, and volume is much closer to the 4-week average at nearly 6.8 billion. 

fri  APRIL 12, 2019 / 5:17 pm 

S&P 500 closes near record high as earnings season begins in earnest

Stephen Culp

DJ:  26,412.30  +269.25       NAS:  7,984.16  +36.81         S&P:  2,907.41  +19.09     4/12

NEW YORK (Reuters) - U.S. stocks closed near record highs on Friday after the largest U.S. bank, JPMorgan Chase & Co, soothed worries that the first-quarter earnings season would dampen Wall Street’s big rally back from last year’s slump.  The S&P 500 is now within a percent of September’s record closing high, and the S&P 500 Total Return Index, which includes reinvested dividends, in fact regained record levels, recovering ground lost after a punishing sell-off in the closing months of the year which brought the benchmark index within a rounding error of bear market territory.  Since then, the three major indexes notched their best quarterly gains in nearly a decade in the first quarter, but have spent April in a holding pattern ahead of first-quarter earnings season.

JPMorgan, effectively jump-starting the quarterly earnings reporting season that will dominate investor sentiment in coming weeks, blew past analyst estimates, easing fears that slowing economic growth could weigh on its results. Its stock rose 4.7% and led a broad rally in bank stocks.  “JPMorgan earnings are important because their operation touches on a wide portion of the economy,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York. “It’s a bellwether for other corporate earnings.”

Analyst now expect S&P 500 companies to show a 2.3% year-on-year decline in earnings, slightly improved from their last reading, per Refinitiv data. But first-quarter profit is still seen logging its first annual contraction since 2016.  However, of the 29 companies in the S&P 500 that have reported thus far, 79.3% have come in above analyst expectations.

Walt Disney Co jumped 11.5% to an all-time high, providing the biggest boost to the Dow and the S&P 500 after pricing its upcoming streaming service.  Streaming rival Netflix Inc slid 4.5%. 

The Nasdaq and the Dow are both about 1.5% below their previous record highs.  For the week, both the S&P 500 and the Nasdaq showed their third straight gains, while the Dow posted a nominal weekly loss.

The Dow Jones Industrial Average rose 269.25 points, or 1.03%, to 26,412.30, the S&P 500 gained 19.09 points, or 0.66%, to 2,907.41 and the Nasdaq Composite added 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 in positive territory.  Financials were the largest percentage gainer, rising 1.9% on the back of JPMorgan Chase earnings.

Healthcare stocks extended their slide, with UnitedHealth Group down 5.2%, Anthem Inc dropping 8.5% and Humana Inc off 2.8%. The S&P 500 Healthcare index slipped 1.0%.  In the largest energy deal since 2016, Chevron Corp said it would buy Anadarko Petroleum Corp for $33 billion in cash and stock.  Chevron’s stock dipped by 4.9% following the announcement, while Anadarko shot up 32.0%.  Boeing Co rose 2.6% as the plane maker’s stock recovered ground following its recent sell-off.

The CBOE Volatility Index - Wall Street’s so-called “fear gauge” slipped to a fresh six-month low on Friday, in a sign investors expect the good times to keep rolling.  Advancing issues outnumbered declining ones on the NYSE by a 1.86-to-1 ratio; on Nasdaq, a 1.31-to-1 ratio favored advancers.  The S&P 500 posted 60 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 95 new highs and 38 new lows.

Volume on U.S. exchanges was 6.75 billion shares, compared to the 6.97 billion average over the last 20 trading days.