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Wall Street hits new highs on earnings optimism, data


By Sinead Carew

(Reuters) - continued its rally on Friday with record closing highs as the fourth-quarter earnings season kicked off with solid from banks and robust drove investor optimism about economic growth.

The 500 and both registered their eight record closing highs out of the first nine trading days of 2018, while the Dow boasted its sixth closing high of the year.

, the biggest U.S. lender by assets, said a U.S. tax overhaul would help future profits by reducing its tax bill and stimulating more business. The bank's shares rose 1.7 percent.

"The fact all the big money centre banks beat on the bottom line is a good omen for the rest of the earnings season," said William Lynch, at Hinsdale Associates, in Hinsdale,

Investors were also hopeful 2018 financial forecasts from U.S. companies would beat estimates as many analysts may not have tax savings fully reflected in their models as the tax bill was signed into law so late in December.

"I don't know how much of that is priced in right now," said Stephen Massocca, at in "It seems like the economy is going OK, inflation is kind of nonexistent right now, wage growth is not an issue for most income statements, so what's not to like here."

Earnings for 500 companies are expected to increase on an average by 12.1 percent in the quarter, with profit for financial services companies likely to increase 13.2 percent, according to I/B/E/S.

rose 3.3 percent. The world's largest reported profit that beat estimates as investors flooded into the relatively low-cost funds.

While earnings beat expectations, its shares slipped 0.7 percent after it set aside $3.25 billion in the fourth quarter to cover legal expenses related to probes into its mortgage and sales practices.

The <.DJI> rose 228.46 points, or 0.89 percent, to 25,803.19, the 500 <.SPX> gained 18.68 points, or 0.67 percent, to 2,786.24 and the Composite <.IXIC> added 49.29 points, or 0.68 percent, to 7,261.06.

For the week, the rose 1.6 percent, compared with the Dow's 2-percent rise and a 1.8-percent advance in the

The consumer discretionary index <.SPLRCD> jumped 1.3 percent after data showed households bought more goods, suggesting the economy exited 2017 with strong momentum.

rose 2.2 percent to breach $1,300 for the first time. It closed at $1,305.20.

The sector was also helped by a late-afternoon report that activist built a position in , sending its shares up 5.3 percent.

were helped by a rise in Treasury yields after underlying U.S. consumer prices for December posted the biggest gain in 11 months, signalling a pickup in inflation.

The Treasury move helped push the down 0.6 percent, making it the weakest performer of the 500's 11 sectors.

Advancing issues outnumbered declining ones on the NYSE by a 1.17-to-1 ratio; on Nasdaq, a 1.54-to-1 ratio favoured advancers.

The 500 posted 164 new 52-week highs and 12 new lows; the Composite recorded 222 new highs and 14 new lows.

Volume so far on U.S. exchanges was 6.88 billion shares, above the 6.39 billion average for the full session over the last 20 trading days.

(Additional reporting by and in New York, Sruthi Shankar in Bengaluru; Editing by and Nick Zieminski)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sat, January 13 2018. 03:06 IST