On Friday, the Dow Jones Industrial Average closed slightly lower even though bank earnings were strong. For the most part banks posted better than expected profits and that’s what held stocks from trading much lower for the day. The bank news was especially welcomed since Chinese trade data came in very weak. In addition, there were some other pieces of data that investors digested in. The problem falls with the consumer sentiment data which fell below expectations.

Bank Earnings

This was the biggest focus on Friday, because good bank earnings is what kept most stocks alive. This definitely helped the Dow Jones to only close lower with a small loss. The banks that reported earnings were J.P. Morgan, Bank of America, and Wells Fargo. All the banks posted better than expected quarterly profit, but only J.P. Morgan managed to beat on the revenue number. Still, investors were happy to see that these banks ended the quarter being profitable. Banks are an important part of any economy, and the Dow Jones typically tends to trade depending upon how well the banks perform during earnings season. There were also two other events that helped drive bank stocks higher. The first of which was the fact that there was an upward move in bond yields. This is a bullish move, because it means higher interest rates on loans. A lot of the management team from these banks also noted increased optimism heading into 2017. This increased optimism could have driven bank stocks higher. More importantly, there are a slew of additional bank earnings coming this week. The rally in the financial sector could continue should the rest of the U.S. banks post profitability during the quarter. J.P. Morgan gained 0.5% to $86.70, Bank of America rose 0.4% to $23.01, and Wells Fargo rose 1.49% to $55.31.

Weak China Trade Data

China trade data was shown as being weaker than expected and that could have had negative consequences for the Dow Jones. China posted that exports fell by 7.7% in 2016. The problem with this data is that it is the second year in a row with a decline in exports. On top of that this is the worst number seen since 2009, just after the global financial crisis. Not even the import data was enough to help alleviate the terrible export data. Imports fell in 2016 by 5.5%. There is one explanation on why China trade data has been lacking. That has to do with the fact that China is starting to shift over its economy away from manufacturing and exports. It is trying to transition to an economy on household spending. This move is the main culprit in export data starting to decline over time. Traders must watch out for what happens over the next few weeks. China is looking to see if Donald Trump keeps his campaign promise about increasing taxes for shipped goods. If that is the route the new U.S. administration takes then Chinese goods will be taxed heavily, and that would have an even more pronounced effect on the prices of exported products.

Consumer Sentiment

Consumer sentiment data in the U.S. fell slightly below expectations, which may have been responsible for capping gains. That’s the bad news, but the good news is that consumer sentiment is just hovering near its 13-year high. Consumer sentiment fell to 98.1 in January, but analysts were looking for consumer sentiment to come in higher at 98.6. Still, consumer sentiment is still high considering that there will be a presidency change in the coming week. Consumer sentiment is an important metric as it tracks the shape of the overall economy. A higher reading indicates that the economy has a better chance of improving. While the reading was slightly lower for January it is still in the high end range. The miss in expectations is what likely caused the Dow Jones to be capped in gains.