By Jessica Menton
The S&P 500 climbed Friday to notch a third consecutive week of gains after two of the nation's biggest banks reported earnings that beat expectations.
The broad index climbed 19.09 points, or 0.7%, to 2907.41. The Dow Jones Industrial Average advanced 269.25 points, or 1%, to 26412.30, and the tech-heavy Nasdaq Composite added 36.80 points, or 0.5%, to 7984.16. The S&P 500 rose 0.5% for the week, while the blue-chip index snapped two straight weeks of gains, slipping less than 0.1%. Both indexes are sitting within 1.6% of their records.
Financial stocks in the S&P 500 led the market higher Friday, climbing 1.9% as earnings season kicked off. JPMorgan Chase said its profit rose 5% and topped analysts' expectations on the strength of its consumer bank. Shares of the nation's largest bank by assets jumped $4.98, or 4.7%, to $111.21, their largest percentage gain since March 2016.
Meanwhile, Wells Fargo, the fourth-largest U.S. bank by assets, s aid first-quarter profit rose , though revenue continued to decline across all of its businesses. Shares of Wells Fargo fell $1.25, or 2.6%, to $46.49.
The Federal Reserve's recent shift to a more-patient stance on raising interest rates has renewed concerns over the banking sector's profitability. Banks have underperformed the broader stock market since a big drop mid-March. S&P 500 financial stocks have recovered some losses in the past week, but their 14% rise this year lags behind the broader index's 16% climb.
"It was a better-than-expected quarter for the banks, which was encouraging to see," said Carter Henderson, portfolio specialist and director of institutional development at Fort Pitt Capital Group. "But I think that's as good as it's going to get for these big banks this year, because in the first quarter they were still getting that tailwind from the last Fed hike in December."
Investors are looking ahead to next week's batch of quarterly earnings results, which includes more big-bank results from Goldman Sachs, Citigroup, Bank of America and Morgan Stanley. Health-care company Johnson & Johnson and video-streaming giant Netflix are also on tap. Profits at companies in the S&P 500 are projected drop 4.3% in the first quarter from a year ago, according to FactSet.
Investors will also parse data on housing and retail sales next week for further insight into the health of the U.S. economy. Data on Friday showed consumers' outlook on the economy worsened in April, a sign that the effects from tax cuts could be starting to fade. The University of Michigan said Friday its preliminary index of consumer sentiment was 96.9 this month, down from March's final reading of 98.4.
Bill Northey, a senior investment director at U.S. Bank Wealth Management, said American consumers are still in a healthy position due to strong job creation and a pickup in wage growth.
"The U.S. consumer is in reasonably good shape, but it can't be disconnected from the pace of slowing growth for the overall economy," Mr. Northey said. "We think there will be a modest downshift in growth, but that's still a healthy environment, and one in which consumers can continue to spend."
In Friday's action, Chevron shares fell $6.23, or 4.9%, to $119.76 after the multinational energy company agreed to buy Anadarko Petroleum in a cash-and-stock deal valued at roughly $33 billion as the company looks to strengthen its market positions in large shale projects. Anadarko's shares soared $14.98, or 32%, to $61.78, their biggest percentage increase on record based on data going back to 1986, according to Dow Jones Market Data.
Walt Disney shares jumped $13.46, or 12%, to $130.06, a new record, after the company updated investors on plans for its new streaming service Disney+.
The yield on the 10-year U.S. Treasury note climbed to 2.560% Friday, from 2.498% Thursday. Yields rise when bond prices fall.
The WSJ Dollar Index, which measures the dollar against a basket of other currencies, edged down 0.2%.
In commodities, U.S. oil prices gained 0.5% to $63.89 a barrel Friday, while gold ticked up 0.1%.
Elsewhere, the Stoxx Europe 600 rose 0.2%. In Asia, Chinese stocks were down slightly in Shanghai and Shenzhen.
--Paul J. Davies contributed to this article.
Write to Jessica Menton at Jessica.Menton@wsj.com