The stock market ended the week with a mixed return and little
change in the major indexes. Though the Standard & Poor’s 500 index hit a
new all-time high midweek, the rally had no legs, as lackluster quarterly
earnings reports from some major industrial firms released later in the week
depressed share prices. Small-cap stocks, however, rose smartly.

In particular,
quarterly earnings reports from big banks and other financials presented a
varied picture. Most showed strong profitability on an absolute level but some,
like Goldman Sachs (ticker:
GS), suffered a drop in revenue while others, like Citigroup (C), didn’t meet Wall Street expectations, even as
earnings doubled.

The Dow Jones
Industrial Average inched up 22 points, or 0.1%, to 16458.56. The broader
S&P 500 index fell four points to 1838.70. On Wednesday, it reached an
all-time high of 1848.38. The Nasdaq Composite index rose 0.6%, or 23 points,
to 4197.58.

The banks were a
drag on the market last week, says Thomas Villalta, director of investment
research at Covenant, a money manager in San Antonio, Texas. The profit picture
was hard to parse, as exemplified by Goldman and Citi. Others had mitigating or
unflattering one-time items, he adds: “But in general the results were a
bit disappointing.”

Among financial
stocks, the market is focused on revenue growth, says Cameron Hinds, a regional
chief investment officer at Wells Fargo Bank. That continues to be a challenge
for the big banks, he says.

Meanwhile, American Express (AXP)
reported that its fourth-quarter profit more than doubled to $1.3 billion, or
$1.21 per share, yet results missed expectations by one cent. Still, revenue
was higher than anticipated, and Amex shares rose 4% to $90.97.

“There were
some odd divergences” last week, adds Steven Sosnick a senior trader at
Timber Hill. There was no follow-through on market’s new high, and volatility
crept back into the market, he says. That’s going to be a different experience
for investors, who, at least in the latter half of 2013, were used to a market
going straight up.

Wells Fargo’s
Hinds expects the market to rise 10% in 2014, but notes that will require
“consistently good earnings.”

Giant
chipmaker Intel (INTC)
reported earnings and revenues that rose, but the company provided downbeat
2014 revenue guidance and the shares were among the biggest decliners in the
Dow Friday, down 2.6% to $25.85

The Commerce
Department said Friday that housing starts for December came in at a
seasonally-adjusted annual rate of 999,000, 10% lower than November’s 1.12
million.

(Source:  Barrons Online)