Bank earnings boost S&P and Nasdaq, retailers weigh on Dow

By Tanya Agrawal

REUTERS - The S&P 500 and Nasdaq were higher in late morning trading on Friday as strong earnings from large U.S. lenders bode well for the rest of the earnings season.

The Dow's gains were comparatively lesser, held back by a drop in consumer stocks after a report showed U.S. retail sales and core retail sales increased less than expected in December.

Trading volumes were light ahead of a three-day weekend.

Bank of America, JPMorgan and Wells Fargo all reported quarterly profits that beat analysts expectations.

Bank of America jumped as much as 2.1 percent to $23.41, their highest since the financial crisis. JPMorgan surged 2.2 percent at a record high of $88.17 and Wells Fargo gained 3.1 percent to $56.20.

Goldman Sachs hit a more than nine-year high, while Morgan Stanley touched a more than eight-year high.

Six of the 11 major S&P sectors were higher, with the financial index's 1.23 percent rise leading the advancers. The KBW Bank index was up 1.64 percent, set for their best day since Dec. 1.

The combined profit of S&P 500 companies is estimated to have risen 5.7 percent in the fourth quarter, largely helped by financial companies, according to Thomson Reuters I/B/E/S.

"Financials have had a very good run post election and the data we've gotten today from the big banks has been very good and we do expect this sector to post strong earnings mostly due to the rising interest rate environment," said Jon Adams, senior investment strategist at BMO Global Asset Management.

At 11:01 a.m. ET (1601 GMT) the Dow Jones industrial average was up 19.97 points, or 0.1 percent, at 19,910.97.

The S&P 500 was up 6.81 points, or 0.29 percent, at 2,277.25.

The Nasdaq Composite was up 31.87 points, or 0.57 percent, at 5,579.36. It had hit a record high of 5564.25. The biggest boost was from Facebook, which jumped 1.9 percent to $128.98 after a Raymond James upgraded the stock.

U.S. stocks overall have been on the rise since the election on optimism that U.S. President-elect Donald Trump's policies will benefit the economy. The S&P financial sector has jumped about 17 percent since the election, outpacing the S&P 500's 6.1 percent rise.

But, analysts fear the market has run too far too soon, with Trump's policies expected to hit legislature hurdles, and with stock valuations stretched.

"There is a lot of optimism baked in 2017 as far as earnings go and we've come a long way very quickly so there's scope for a pullback, but overall the outlook for 2017 is relatively positive," said Adams.

Advancing issues outnumbered decliners on the NYSE by 1,832 to 930. On the Nasdaq, 1,988 issues rose and 694 fell.

The S&P 500 index showed 28 new 52-week highs and three new lows, while the Nasdaq recorded 96 new highs and six new lows.

(Reporting by Tanya Agrawal; Editing by Savio D'Souza)