(Reuters) - Wall Street’s main indexes surged on Friday as strong results for JPMorgan lifted financial stocks and robust retail sales data drove gains in consumer stocks.
The biggest U.S. lender by assets said the new tax law would help future profits by not only reducing the amount it pays the federal government but also by stimulating more business.
Shares of JP Morgan rose 1.1 percent, helping lift the S&P financial index up 0.6 percent, after its fourth-quarter profit beat estimates.
“Their effective tax rate will be declining from 30 percent to 19 percent, that’s very meaningful. It should generate more than a billion dollars flowing into the bottom line,” said Ron Weiner president and founder of RDM financial in Westport Connecticut.
Earnings for S&P 500 companies are expected to increase on an average by 12.1 percent in the quarter with profit for financial services companies likely to increase 13.2 percent, according to Thomson Reuters I/B/E/S.
The S&P consumer discretionary index .SPLRCD jumped 0.81 percent after an increase in retail sales showed households bought more goods and figures for the prior month were revised higher, suggesting the economy exited 2017 with strong momentum.
“A lot of these companies like Target and Home Depot are getting on with the internet ecosystem of e-commerce,” said Josh Jalinski, president of Jalinski Advisory Group.
Sales at online retailers soared 1.2 percent.
Another data showed U.S. consumer prices recorded their biggest rise in 11 months in December on gains in the cost of rental accommodations and healthcare, bolstering expectations that inflation will accelerate this year.
Advanced Micro Devices (AMD.O) fell 2.66 percent after the chipmaker said its microprocessors are prone to both variants of the Spectre security flaw, days after saying its risk for one of them was “near zero”.
Advancing issues outnumbered decliners on the NYSE by 1,557 to 1,220. On the Nasdaq, 1,864 issues rose and 920 fell.
(This version of the story has been refiled to fix typo)
Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur