S&P hits 5-year high as markets score weekly gain

US markets turned in their third straight week of gains Friday with the S&P 500 and the Dow clawing up to their best closing levels in five years. Activity was hedged by a mixed batch of earnings, but the heavyweight banks -- with the exception of Citigroup -- underpinned the week's gains with their steady-or-better earnings. Also helping was General Electric's slightly better than expected quarterly earnings report out Friday, and its expectations of a better 2013, which drove the US industrial powerhouse and Dow component to a 4.3 percent gain for the week. By the end of trade Friday, the S&P 500 finished at its highest level since December 26, 2007, closing up 0.95 percent for the week at 1,485.98. The Dow Jones Industrial Average hit its best since December 10, 2007, rising 1.19 percent 13,649.70. The Nasdaq also eked out a gain for the week, rising 0.28 percent but held back by Apple's fall on worries over iPhone sales and a bad quarterly report from Intel on Friday. Nigel Gault and Paul Edelstein of IHS Global Insight said that of 40 S&P 500 companies reporting, 29 beat expectations that were already depressed, not unlike recent quarters, "The results have so far been good enough to prevent a sell-off in equities, but haven't nudged stocks higher," they said. The gains for the week, they said, came more from a handful of economic reports, including a steep drop in unemployment claims, and a rebound in housing starts in December. Also helping hold the floor was China's report of better than expected fourth quarter economic growth, which came in at a pace of 7.9 percent, "indicating that China's economy is on the mend and has likely avoided a hard landing." Most major financial institutions reported during the week, with a mix of indications about where the industry was going: Losses were down but margins did not improve overall, and huge mortgage-related settlements still weighed. "The losses have been coming down as the economy has been stabilizing," said Marty Mosby, an analyst at Guggenheim Partners. "It is the more super regional banks that have done well versus the much larger global banks like Citibank and Bank of America," said Sam Stovall from S&P Capital IQ. "But other banks like PNC, BB&T Corporation, and Wells Fargo and even JPMorgan Chase have done better." Morgan Stanley was the uber-performer of the large banks, adding 11 percent for the week, while Bank of America sagged 4.2 percent. The global grounding of Boeing's 787 weighed on the market, but investors seemed ready to give the company the benefit of the doubt, as the shares gave up only 0.2 percent over the five sessions. Looking ahead, Fred Dickson of DA Davidson cautioned over the coming weeks of fourth quarter earnings releases. "Corporate earnings and revenue guidance remains very cautious regarding first quarter and full year 2013 following a quarterly trend that extends back several quarters," he said. The coming trading week will be shortened by the Martin Luther King national holiday Monday, which will also see US President Barack Obama inaugurated in Washington for his second term. Economic data will be focused on December's new and existing home sales. Among companies reporting earnings will be Google, DuPont, Johnson & Johnson and IBM (Tuesday), Apple, McDonald's, United Technologies and 3M on Wednesday, as well as Microsoft and Lockheed Martin (Thursday).