By Anna Isaac and Paul Vigna
The Dow Jones Industrial Average edged higher Tuesday as big banks kicked off fourth-quarter earnings season with mostly strong results.
The blue-chip index rose 32.62 points, or 0.1%, to 28939.67. The S&P 500, though, fell 4.98 points, or 0.2%, to 3283.15, and the Nasdaq Composite lost 22.60 points, or 0.2%, to 9251.33.
JPMorgan Chase and Citigroup reported improved results in their investment banks. Shares of JPMorgan rose $1.60, or 1.2%, to $138.80, while Citi rose $1.26, or 1.6%, to $81.91. That helped push the Nasdaq KBW Bank index up 0.1%.
But Wells Fargo was an outlier, reporting its profit sank due to legal costs incurred from problems in its sales practices. It shares fell $2.81, or 5.4%, to $49.30.
Companies in the S&P 500 are expected to report a fourth-quarter earnings decline of 2.4% from the year earlier, according to Factset. That would mark the fourth consecutive quarter of lower earnings, the longest such stretch since a period from 2015 to 2016.
The equity market's recent gains have come as corporate earnings in the U.S. have slowed sharply, resulting in stretched valuations, said Ben May, the director of global macro research at Oxford Economics. Although the fourth-quarter numbers are important, more critical will be what executives say about the rest of 2020, he added.
"It perhaps creates more downside risks if the economy underperforms or earnings don't improve to the extent expected," he said.
In other corporate news, Delta Air Lines rose $1.96, or 3.3%, to $61.45 after the airline said lower fuel prices and strong demand over the holidays helped boost its profit, which exceeded analysts' expectations. Meanwhile, Boston Scientific fell $2.81, or 6.2%, to $42.66 after the medical-devices maker warned its sales would fall shy of expectations.
Also, Visa rose 72 cents, or 0.3%, $196.05 after it agreed to buy fintech firm Plaid for $5.3 billion.
Stocks lost some of their momentum in afternoon trading following a Bloomberg report that U.S. tariffs are likely to stay in place until after the election. The U.S. and China are expected to sign a phase-one trade agreement in Washington on Wednesday.
Frank Cappelleri, the executive director of brokerage Instinet, said Tuesday's market moves weren't significant in either direction.
In fact, he said, equities have been unusually calm since mid-October, and that itself is the more important trend to watch.
"That type of market calm can't last forever," he said. "It's just a matter or when and what's going to cause it." Like others, he said he was looking to the coming earnings season for catalysts.
In China, stocks fell on data showing exports climbed just 0.5% last year, a sharp comedown from 2018's expansion of nearly 10%. Imports dropped 2.8% last year.
While the slowdown comes amid a two-year trade war between the world's largest economies, China's foreign trade revived in December as tensions ebbed following signals that Washington was nearing a trade deal with Beijing. Investors in recent days have been cautiously optimistic about that accord as they await more information on the specific terms of the agreement.
"The overall mood music is positive, but the key thing is what the actual wording of the agreement is," said Edward Park, deputy chief investment officer in London for Brooks Macdonald Asset Management. "Investors need to see real progress on U.S.-China."
Separately, China's currency strengthened to its strongest level since July in offshore trading after the U.S. on Monday dropped it from a list of currency manipulators, days before the likely signing of a phase-one trade deal. The yuan pared back its gains later in the day.
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