Stocks gain on strong bank earnings

Stocks were higher Friday but off their earlier highs after three big U.S. banks reported quarterly profits that topped forecasts, boosting hopes on Wall Street that third-quarter earnings will be better than feared and mark the end of the so-called earnings recession.

Powered by the upbeat bank earnings, around 1 p.m. ET the Dow Jones industrial average was up 70 points, or 0.4%, but was off earlier highs of about 160 points. The broad Standard & Poor's 500 stock index was 0.2% higher and the Nasdaq composite rose 0.2%.

Before the opening bell, JPMorgan Chase (JPM)Citigroup (C) and Wells Fargo(WFC), which is embroiled in a crisis over fraudulently opening customer accounts, all posted profit and sales numbers that exceeded analyst expectations. Bank shares were mixed after sharp early dains. Shares of JPMorgan were down 0.1% and Citigroup stock was 0.3% higher. Wells Fargo was down 0.7%.

Wall Street is hoping the S&P 500 will break a string of four straight quarters of contracting profit growth when the third-quarter earnings season is complete.

Investors will also be listening for further clues on the Federal Reserve's timetable for interest rate hikes, as chair Janet Yellen delivers a speech at 1:30 pm. ET.

U.S. retail sales rose 0.6% in September, coming in line with forecasts, another signal that the U.S. consumer is holding up well. Inflation at the producer level rose 0.3% last month, more than the 0.2% consensus estimate, according to the latest monthly reading on the producer price index.

The trio of bank beats in the U.S. provided a lift to stocks in Europe. The broad Stoxx Europe 600 index was 1.3% higher, and the German DAX was up 1.6% and the CAC 40 in Paris was 1.5% higher.

Shares also rose in Japan, with the Nikkei 225 up 0.5%.



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