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* JPMorgan, Citi rise on fourth-quarter profit beat
* Wells Fargo slides as legal costs hit earnings
* Delta Air Lines gains on profit beat; peers rise
* Indexes: Dow +0.08%, S&P 500 -0.18%, Nasdaq -0.22% (Updates to afternoon)
By Noel Randewich
Jan 14 (Reuters) - U.S. stocks hit intra-day record highs on Tuesday before turning negative following a report that the United States would likely maintain tariffs on Chinese goods until after November’s presidential election.
The eventual removal of tariffs by Washington would depend on Beijing’s compliance with the Phase 1 trade accord, which is expected to be signed on Wednesday, Bloomberg reported, citing sources.
With the S&P 500 at record levels, equivalent to around 18 times expected earnings, algorithmic traders and human investors immediately interpreted the Bloomberg report as a reason to sell, said Joe Saluzzi, co-manager of Themis Trading, in Chatham, New Jersey.
“We’re in a Jason Bourne market. The first thing Jason Bourne does when he walks into a room is look for the exit, just in case,” Saluzzi said, comparing investor sentiment to the fictional action character.
The Dow Jones Industrial Average, S&P 500 and Nasdaq each touched intra-day record highs before losing ground in afternoon trade.
Wall Street has surged in recent weeks, fuelled by optimism that a truce in U.S. President Trump’s trade war with China would boost corporate earnings.
China has pledged to buy nearly an additional $80 billion of manufactured goods from the United States over the next two years, and over $50 billion more in energy supplies, Reuters reported, citing a source briefed on the Phase 1 trade deal.
Kicking off the fourth-quarter earnings season, JPMorgan Chase & Co, rose 1.4% after reporting a better-than-expected profit on strength in its trading and underwriting businesses.
Wells Fargo & Co tumbled 4.9% after reporting a slump in profit as it set aside $1.5 billion for legal expenses. Citigroup Inc rose 2.1% as it topped Wall Street profit estimates.
The S&P 500 banks index was up 0.3%.
“It (bank earnings) is reflective of where we are in the economic cycle,” said Mike Loewengart, vice president of investment strategy at E*TRADE Financial Corp.
“We’re coming off a decade of consistent gains and banks, especially JPMorgan producing record earnings, it’s not surprising given the strength of the U.S. economy.”
Analysts expect profits at S&P 500 companies to drop 0.5% for the second consecutive quarter, according to Refinitiv IBES data, largely due to a drag in energy and industrial earnings that have been hit by a prolonged Sino-U.S. trade war.
At 2:24 p.m. ET, the Dow Jones Industrial Average was up 0.08% at 28,931.05 points, while the S&P 500 lost 0.18% to 3,282.23.
The Nasdaq Composite dropped 0.22% to 9,253.13.
Delta Air Lines Inc rose 3.3% after better-than-expected quarterly profit, boosted by customers gained from rival airlines’ 737 MAX cancellations. The S&P 1500 airlines index rose 1.5%.
Advancing issues outnumbered declining ones on the NYSE by a 1.17-to-1 ratio; on Nasdaq, a 1.18-to-1 ratio favored advancers.
The S&P 500 posted 59 new 52-week highs and no new lows; the Nasdaq Composite recorded 156 new highs and 24 new lows. (Reporting by Noel Randewich in San Francisco, additional reporting by Sruthi Shankar in Bengaluru Editing by Nick Zieminski)