By Barbara Kollmeyer, MarketWatch , Ryan Vlastelica
Facebook on track for biggest one-day drop since September
U.S. stocks advanced on Friday, with major indexes adding to their recent string of records fueled by optimism over the economy and the state of American corporations as the fourth-quarter earnings season began.
The day's gains were broad, with eight of the 11 primary S&P 500 sectors gaining on the day. Financial stocks were among the biggest gainers, following high-profile results from that group, while energy rose as crude oil traded near a three-year high. However, a sharp decline for Facebook shares cast shadow over an otherwise day.
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What are stock indexes doing?
The Dow Jones Industrial Average rose 194 points, or 0.8%, to 25,768. The S&P 500 added 17 points to 2,784, a gain of 0.6%. The Nasdaq Composite Index rose 45 points to 7,256, a gain of 0.6%. All three closed at records on Thursday, and hit intraday records in early trading.
So far this week, the Dow is up 1.9% while the S&P is up 1.4% and the Nasdaq is up 1.5%. This is poised to be the second straight weekly gain for both the Dow and the S&P, as well as their seventh positive week of the past eight.
The Russell 2000 gained 0.3% to 1,590. The index of small-capitalization stocks hit an intraday record, and is up 1.9% on the week, which is set to be its biggest weekly gain since September.
The U.S. stock market will be closed on Monday for Martin Luther King Jr. Day.
What is driving the markets?
The fourth-quarter earnings season unofficially kicked off on Friday, with results from a number of major financial institutions, a sector analysts expect to put in a mixed performance . Earnings growth is expected to be strong this quarter, although the recently passed tax law out of Washington is expected to "muddy" some results , according to Goldman Sachs.
JPMorgan Chase & Co.(>> JP Morgan Chase & Company) reported a 37% drop in earnings , although this was largely related to one-time charges associated from the new tax law, which is expected to provide further gains over the longer term. Wells Fargo & Co. (>> Wells Fargo) reported earnings and revenue that came in below consensus analyst forecasts in the fourth quarter. Shares of J.P. Morgan rose 1% while Wells lost 0.8%.
BlackRock Inc. (>> BlackRock) reported earnings that came in above expectations , helped by the massive inflows into the company's iShares line of exchange-traded funds. Shares jumped 2.8%.
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Separately, German Chancellor Angela Merkel's conservative CDU party and Martin Schulz's center-left SPD reached an agreement on a blueprint for formal coalition negotiations . This was seen as a sign of political stability in the eurozone's biggest economy, and it supported the euro, which in turn led to a decline in the U.S. dollar. A weaker greenback is seen as providing a tailwind for the profits of multinational companies. The iShares MSCI Germany ETF(EWG) rose 0.9%.
U.S. retail sales rose 0.4% in December, the fourth straight monthly gain, although it was slightly below the 0.5% increase that analysts had forecast. The consumer-price index rose 0.1% in December.
What are strategists saying?
"The economy is looking good, numbers look good, and companies are making money. This quarter may be a little messy because of the tax bill, but there's so much optimism, so much enthusiasm about earnings," said Michael Matousek, head trader at U.S. Global Investors. "Things are really starting to take off, and the only thing that makes it scary is the idea that we may be culminating to a top in the market."
Stocks have been in an essentially uninterrupted uptrend for years, and the S&P 500 is poised to go a historic length of time without a dip of even 5%. Volatility has also been historically low .
"The move isn't about fundamentals anymore, but the overall euphoria," said Jason Browne, chief investment officer of FundX Investment Group. "When we do get negative moves we don't hold them; the environment pushes people to buy dips. Will that last forever? Of course not. You have to hope people are being realistic."
Which stocks are in focus?
Shares of Facebook Inc.(>> Facebook) fell 4.2%, in what is on track to be its biggest one-day percentage loss since September. The decline came after Chief Executive Mark Zuckerberg, in a blog post published late Thursday, said the social-media website will prioritize personal posts from family and friends over business and news media posts. He acknowledged the move could come at the expense of the company's bottom line.
GameStop Corp.(>> GameStop Corp.) sank 11% after it reported a big jump in holiday sales, but said it would take impairment charges of $350 million to $400 million related to its technology brands business.
Shares of eBay Inc.(>> eBay) rose 0.8% after an upgrade from analysts at SunTrust RH. Separately, Snap Inc.(>> Snap Inc) fell 3.5% after it was downgraded to underperform at Raymond James.
What are other markets doing?
In Europe, equity gains were checked by a strong euro, with the Stoxx 600 index up 0.3%.
Stocks in Asia closed mostly higher , but Japan's Nikkei 225 index fell 0.2%.
Gold rose 1.2% as the dollar fell. The ICE dollar index tumbled 0.9% to 91.05, with losses concentrated against the euro , which hit a three-year high against the dollar.
Oil prices resumed their climb, trading near 3-year highs, as Trump extended temporary waivers on U.S. sanctions against Iran, as expected. The West Texas Intermediate February contract was last up 0.6% at $64.20 a barrel.
In cryptocurrencies, the bitcoin spot price rose 2.7% to $13,640. Bitcoin futures on the CME Group Inc. rose 1.5% to $13,590.
Anora Gaudiano contributed to this report.