S&P 500 closes near record high as earnings season begins in earnest

© Reuters. FILE PHOTO: Traders work on the floor at the NYSE in New York

By Stephen Culp

NEW YORK (Reuters) - U.S. stocks closed near record highs on Friday after the largest U.S. bank, JPMorgan Chase & Co (NYSE:JPM), soothed worries that the first-quarter earnings season would dampen Wall Street's big rally back from last year's slump.

The S&P 500 is now within a percent of September's record closing high, and the S&P 500 Total Return Index, which includes reinvested dividends, in fact regained record levels, recovering ground lost after a punishing sell-off in the closing months of the year which brought the benchmark index within a rounding error of bear market territory.

Since then, the three major indexes notched their best quarterly gains in nearly a decade in the first quarter, but have spent April in a holding pattern ahead of first-quarter earnings season.

JPMorgan, effectively jump-starting the quarterly earnings reporting season that will dominate investor sentiment in coming weeks, blew past analyst estimates, easing fears that slowing economic growth could weigh on its results. Its stock rose 4.7% and led a broad rally in bank stocks.

"JPMorgan earnings are important because their operation touches on a wide portion of the economy," said David Carter, chief investment officer at Lenox Wealth Advisors in New York. "It's a bellwether for other corporate earnings."

Analyst now expect S&P 500 companies to show a 2.3% year-on-year decline in earnings, slightly improved from their last reading, per Refinitiv data. But first-quarter profit is still seen logging its first annual contraction since 2016.

However, of the 29 companies in the S&P 500 that have reported thus far, 79.3% have come in above analyst expectations.

Walt Disney (NYSE:DIS) Co jumped 11.5% to an all-time high, providing the biggest boost to the Dow and the S&P 500 after pricing its upcoming streaming service.

Streaming rival Netflix Inc (NASDAQ:NFLX) slid 4.5%.

The Nasdaq and the Dow are both about 1.5% below their previous record highs.

For the week, both the S&P 500 and the Nasdaq showed their third straight gains, while the Dow posted a nominal weekly loss.

The Dow Jones Industrial Average rose 269.25 points, or 1.03%, to 26,412.3, the S&P 500 gained 19.09 points, or 0.66%, to 2,907.41 and the Nasdaq Composite added 36.81 points, or 0.46%, to 7,984.16.

Of the 11 major sectors in the S&P 500, all but healthcare ended the session in positive territory.

Financials were the largest percentage gainer, rising 1.9% on the back of JPMorgan Chase earnings.

Healthcare stocks extended their slide, with UnitedHealth Group (NYSE:UNH) down 5.2%, Anthem (NYSE:ANTM) Inc dropping 8.5% and Humana Inc (NYSE:HUM) off 2.8%. The S&P 500 Healthcare index slipped 1.0%.

In the largest energy deal since 2016, Chevron Corp (NYSE:CVX) said it would buy Anadarko Petroleum Corp (NYSE:APC) for $33 billion in cash and stock.

Chevron's stock dipped by 4.9% following the announcement, while Anadarko shot up 32.0%.

Boeing (NYSE:BA) Co rose 2.6% as the plane maker's stock recovered ground following its recent sell-off.

The CBOE Volatility Index - Wall Street's so-called "fear gauge" slipped to a fresh six-month low on Friday, in a sign investors expect the good times to keep rolling.

Advancing issues outnumbered declining ones on the NYSE by a 1.86-to-1 ratio; on Nasdaq, a 1.31-to-1 ratio favored advancers.

The S&P 500 posted 60 new 52-week highs and 3 new lows; the Nasdaq Composite recorded 95 new highs and 38 new lows.

Volume on U.S. exchanges was 6.75 billion shares, compared to the 6.97 billion average over the last 20 trading days.