The markets closed higher yet again thanks to the earnings reports from big banks. The Dow 30 closed higher by 141, the S&P 500 added 5, and the Nasdaq 100 closed higher on the day by 10.
Tomorrow's focus will be on more earnings from banks including Morgan Stanley (MS ) and credit card company American Express (AXP ). Netflix (NFLX ) will be the major headline after the close tomorrow with their earnings announcement as well. Traders know that the fourth quarter earnings release is the most volatile and averages a 12% pop to the upside, but with the stock already higher by 50% and overbought, anything seems possible.
Sector News
Banks were one of the leading sectors today thanks to earnings from a handful of banks that were mostly better than expected. Over the last 21 days, the banks have rallied over 15% off their lows. Today technical traders noted the spike above the 50-day moving average for the first time in over a month.
Consumer staples were a notably weak area of the markets today, nearly erasing all they gained yesterday. While the sector is higher by almost 7% from its lows, today's reversal could signal a pause from the bulls.
Stock News
Goldman Sachs (GS ) shares were higher today as the company reported a nice beat on earnings ($6.04 vs. $4.45) and revenue for the fourth quarter. Revenue came in higher by 12% year-over-year. The company also announced they would raise their reserves for litigation in the 1MDB scandal. Currently GS trades at a 7 P/E, the third cheapest in all financials from an earnings standpoint.
Bank of America (BAC ) shares were also higher on the day as the company announced earnings that beat forecasts by 7 cents ($0.70 vs $0.63) on stronger revenues. Profit came in almost three times last year's, which further helped fuel share prices. BAC is currently trading at an 11.55 P/E, which is mid range for big banks, but still cheaper than WFC using that metric.
United Airlines (UAL ) shares got a boost following their earnings announcement yesterday, which showed the company beat on earnings by 39 cents ($2.41 vs $2.02) thanks to stronger revenues. The company also announced guidance which was in line with expectations. They also shared that their expansion domestically has helped increase their overall customer count.
