Stock-market bulls attempted to extend a winning streak to a fourth day Friday, buoyed by news reports that stoked hopes for progress in trade talks between the U.S. and China.
How are the benchmarks faring?
The Dow Jones Industrial Average DJIA, +1.38% rose 228 points, or 0.9%, to 24,596; the S&P 500 index SPX, +1.36% gained 28 points, or 1.1%, to 2,664; and the Nasdaq Composite COMP, +1.30% added 75 points, or 1.1%, to 7,160.
For the week, the S&P and Dow are each up 2.6% and the Nasdaq is looking at a gain of 2.7%.
Equity markets will be closed on Monday in observance of Martin Luther King Jr. Day.
What’s driving the market?
Upbeat expectations on trade were reinforced by a report from Bloomberg that Chinese officials have offered to increase imports from the U.S. by $1 trillion over the next six years, a plan that would reportedly bring the U.S. trade deficit with China to zero by 2024.
That comes after stocks got a late lift Thursday from a report by The Wall Street Journal that U.S. officials were debating a possible ease in tariffs on Chinese imports, to give Beijing incentive to make deeper concessions over the trade dispute.
A Treasury spokesman immediately walked back the report, telling the newspaper that any bargaining positions remained “at the discussion stage.” The source also said neither Treasury Secretary Steven Mnuchin nor U.S. Trade Representative Robert Lighthizer have made any specific trade-related recommendations, and talks were still ongoing.
Meanwhile, investors continue to digest a new round of earnings reports, like those from Netflix Inc. NFLX, -1.91% , which reported strong subscriber and profit growth after the bell on Thursday, but missed on revenue. The stock traded lower, but its 32% rise year-to-date reflects the glass-half-full sentiment that has overtaken markets in recent weeks.
What are the analysts saying?
“With the shutdown slowly taking 0.1 percentage points of GDP each week, the president knows a victory in resolving the trade war can give him leverage on continue his battle with Democrats on his border wall funding,” wrote Edward Moya, market analyst at OANDA in a Friday morning note.
“Yesterday’s Wall Street Journal report that Treasury Secretary Steven Mnuchin reportedly proposed the idea of lifting some or all the tariffs gave stocks a strong bid. It was quickly refuted by the Treasury, but story shows how anxious markets are in looking for positive momentum to continue with trade talks,” he added.
“We’ve generally have seen good corporate earnings,” so far this season, Mark Esposito, president of Esposito Securities told MarketWatch.
“Other than a few exceptions, bank earnings have been good, which reflects well on the overall economy,” he said, pointing to SunTrust Banks Inc.’s Friday earnings report as an example of a regional bank outperforming expectations, while its management communicated optimism toward the health of the U.S. economy.
What data and Fed speakers are investors watching?
New York Fed President John Williams, a voting member of the rate-setting Federal Open Market Committee, said that the Federal Reserve should respond “carefully” to a U.S. economy that appears to be slowing, in a speech to the New Jersey Bankers Association’s Economic Leadership Forum.
““But let me be clear: a softer economic outlook doesn’t mean we should prepare for doom and gloom,” he added.
U.S. industrial production rose 0.3% in December, the Federal Reserve reported Friday morning, in line with expectations, per a MarketWatch poll of economists.
The University of Michigan’s consumer confidence index fell to a more than two-year low of 90.7 in January, down from 98.3 in December, and well below expectations of 97.5, according to a MarketWatch economist poll.
Philadelphia Fed President Patrick Harker, a nonvoting member of the FOMC, gave a speech on the future of Philadelphia, Friday morning. He said that “overall the economy is doing well,” but that the good economy isn’t yet benefitting some workers who lack the skills and social capital get hired by companies in need of labor.
Which stocks are in focus?
Tesla Inc. TSLA, -10.06% shares fell 9.1% after the company announced job cuts and warned on profits.
Netflix NFLX, -1.91% shares retreated 3.3% early Friday, indicating investor dissatisfaction with the streaming video service giant’s fourth-quarter results and upbeat calls from Wall Street analysts.
Shares of American Express Co. AXP, +0.28% traded 0.7% lower Friday, after the financial-services company reported mixed fourth-quarter results Thursday evening.
SunTrust Banks Inc. STI, +5.10% stock rose 4.4% after the bank reported better-than-expected profits.
Shares of Tiffany & Co. TIF, +5.56% rose 3.3%, even after the luxury jewelry retailer reported holiday-period sales that declined from a year ago and provided a downbeat full-year profit and sales outlook. The stock has fallen nearly 35% over the past six months.
Eli Lilly and Co. LLY, -2.76% stock was down 3.2% early Friday, after the company said a late-stage trial of a treatment for sarcoma failed to meet its main goals.
Shares of VF Corp. VFC, +12.71% rose 11.7%, after the parent company of Vans and The North Face reported better-than-expected earnings and sales.
How did the benchmarks fare yesterday?
On Thursday, the Dow erased an earlier loss to rise 162.94 points, or 0.7%, to 24,370.10 in choppy trade. The blue-chip gauge was up 267 points at its session high. The S&P 500 added 0.8% to 2,635.96 and the Nasdaq gained 0.7% to finish at 7,084.46.
How are other markets trading?
Markets in Asia surged, led by a 1.4% jump for China’s Shanghai Composite Index SHCOMP, +1.42% In Europe, the Stoxx Europe 600 SXXP, +1.80% rose 1.6%.
Crude oil CLG9, +2.86% was also moving higher, while gold GCG9, -0.77% is falling and the U.S. dollar DXY, +0.31% was steady.
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