Bear Market for Financials? Not So Fast.

It’s been a tense time for the stock market, which is richly valued and so vulnerable to any sort of bad news.

But today, good news arrived to send us into the weekend feeling a bit more relaxed.

(I’m not even going to comment on last night’s National(s) tragedy. There’s always next year.)

First, three global banks announced earnings that were better than expected. JPMorgan Chase, Citigroup and Wells Fargo all exceeded analysts’ estimates for revenue and earnings per share, thanks to higher than expected trading revenue at the first two; at Wells Fargo, mortgage loans performed well and the company’s results were not badly tainted by its client-cheating scandal, which only affected the last two weeks of the quarter.

The solid quarters for big banks relieved a growing worry that global mega-banks are starting to struggle, due to rising bad loans and low profit margins. Today’s news refutes that notion and indicates that we’re not on the cusp of a bear market for financial stocks.

Subscribers will find winning ideas in the financial sector in several of our newsletters, including Personal Finance and Canadian Edge.

Second, U.S. retail sales were up 0.6% in September – even with expectations, but a positive result given that some stock-market bears are predicting that the U.S. consumer will start spending less, weakening the economy. Today’s news takes some air out of that argument.

While many retailers are struggling with the long-term transition to online shopping, the overall industry may be in an upcycle thanks to low unemployment and rising wages. That means some stocks are due to be big winners, while others continue to flounder. Linda McDonough has drilled down deep into retail and shares her latest picks for subscribers of Profit Catalyst Alert and Growth Stock Strategist.

Third, producer prices in China confounded expectations by actually rising – the first increase in three years. Consumer inflation also rose more than expected. While the September results could be blips, they at least eased fears that China’s economy is getting worse. China’s trade numbers, released Thursday, had rattled world markets – so the inflation report calmed them, for now.

It’s only one day, but a pretty cheerful one for those of us who get annoyed when the perpetual bears start growling. The market is overdue for a correction – one that we’ll exploit to snatch up bargains – but the world isn’t coming to an end.

On that note, let’s all enjoy our weekends.