Macau Cheers Wall Street But Dow Disappoints

US casino stocks enjoyed strong gains on Friday after the Macau government set out plans for the future of the SAR's gaming industry, though the Dow closed lower as investors were disappointed by fourth quarter results from big US banks.

Las Vegas Sands rallied 14.2 percent while Melco Resorts advanced 16.6 percent and Wynn Resorts closed up 8.6 percent after Macau's government capped the number of new casino operators allowed to operate to six with an operating period of up to 10 years.

The Nasdaq and the S&P regained lost ground in afternoon trading to close higher. Meanwhile the consumer discretionary stocks put pressure on the indexes throughout the session after morning data showed a December decline in retail sales and a souring of consumer sentiment.

JPMorgan Chase & Co tumbled after reporting weaker performance at its trading arm. The bellwether lender also warned that soaring inflation, the looming threat of Omicron and trading revenues would challenge industry growth in coming months.

Along with JPMorgan, big decliners putting pressure on the Dow included financial stocks Goldman Sachs, American Express and home improvement retailer Home Depot.

Citigroup shares fell after it reported a 26 percent drop in fourth-quarter profit, while asset manager BlackRock Inc fell 2.2 percent after missing quarterly revenue expectations.

"The bar was very high going into (JPMorgan) results. On the surface it was good but, under the hood, not so much," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. In the interest rate hiking cycle expected this year "positioning was very crowded on the long side" going into the earnings season.

For consumer stock weakness, James pointed to "clearly disappointing" retail sales, which dropped 1.9 percent last month due to shortages of goods and an explosion of Covid-19 infections. Separate data showed soaring inflation hit US consumer sentiment in January, pushing it to its second lowest level in a decade.

Retail sales and bank loan growth raised doubts about the economic outlook for the current quarter and 2022 for Keith Buchanan, portfolio manager at Globalt in Atlanta.

"The question is, does the economy have enough strength to get through the risk Omicron brings as fiscal and monetary stimulus is rolling off," Buchanan said.

The Dow Jones Industrial Average fell 0.56 percent, to 35,912, the S&P 500 gained 0.08 percent, to 4,663 and the Nasdaq Composite added 0.59 percent, to 14,894. (Reuters)