By Tanya Agrawal
(Reuters) – U.S. stocks were higher in morning trading on Thursday as bank stocks gained after data showed that the domestic economy grew at a faster pace in the fourth-quarter than previously estimated.
Gross domestic product increased 2.1 percent, compared with the previously reported 1.9 percent, the Commerce Department said.
Bank of America (N:BAC), Citigroup (N:C) and JPMorgan (N:JPM) were all up between 0.8-1.6 percent, while Goldman Sachs’ (N:GS) 1.4 percent rise helped lift the Dow. The market has been range bound in the past few days as investors look for new catalysts and assess the impact of Republicans’ failure to pass a healthcare bill on tax reform and the rest of President Donald Trump’s pro-growth agenda, hopes for which have helped drive stocks to record highs.
But the rally may be near its peak, according to a Reuters poll of strategists, who forecast U.S. shares will gain less than 3 percent between now and year-end. The S&P had risen 10.3 percent since the U.S. election through Wednesday’s close.
The rapid climb in equities has raised concerns regarding valuations, with the S&P 500 trading at nearly 18 times earnings estimates for the next 12 months against its long-term average of 15 times.
The market will be looking at quarterly earnings to see if the lofty valuations can be supported. First-quarter earnings for S&P 500 companies are expected to rise 10.1 percent, according to Thomson Reuters I/B/E/S.
“It’s the end of the quarter and investors are buying whatever little dip that we’ve seen,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
“The market has been quiet in the past few days and are looking forward to the first-quarter earnings in the absence of any major economic data.”
At 10:50 a.m. ET the Dow Jones Industrial Average (DJI) was up 82.9 points, or 0.4 percent, at 20,742.22.
The S&P 500 (SPX) was up 7.54 points, or 0.31 percent, at 2,368.67.
The Nasdaq Composite (IXIC) was up 15.52 points, or 0.26 percent, at 5,913.06.
Eight of the 11 major S&P sectors were higher, with the financial index’s (SPNY) 0.93 percent rise leading the advancers.
Investors are also watching comments from a host of Federal Reserve officials on clues for the path forward for interest rate hikes.
Cleveland Fed President Loretta Mester said she sees more rate hikes this year as the U.S. economy is expected to rebound from what looks like a weak first quarter.
Dallas Fed chief Robert Kaplan, San Francisco Fed head John Williams and New York Fed President William Dudley are also scheduled to make appearances.
Shares of Lululemon Athletica (O:LULU) plunged as much as 22.6 percent to a more than one-year low of $51.30 after the Canadian yoga and leisure apparel retailer said first-quarter comparable sales were expected to fall.
ConocoPhillips (N:COP) rose 7.8 percent to $49.50 after the company said it agreed to sell oil sands and western Canadian natural gas assets to Cenovus Energy (N:CVE). Cenovus was down 10.9 percent at $11.65.
Advancing issues outnumbered decliners on the NYSE by 1,642 to 1,103. On the Nasdaq, 1,524 issues rose and 1,096 fell.
The S&P 500 index showed 14 new 52-week highs and no new lows, while the Nasdaq recorded 67 new highs and 11 new lows.[:]