Market Snapshot: S&P 500, Nasdaq Close At 5-month High On China Trade, Global Growth Optimism

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Optimism over trade talks is bolstering market sentiment.

U.S. stocks closed higher Friday, with the S&P 500 and the Nasdaq finishing at five-month highs, as market sentiment was buoyed by encouraging headlines on U.S.-China trade negotiations and Chinese assurances of forthcoming economic stimulus.

How did major indexes fare?

The S&P 500 index SPX, +0.41% climbed 14 points, or 0.5%, to 2,822.48 and the Nasdaq Composite Index COMP, +0.76% advanced 57.62 points, 0.8%, to 7,688.53. The Dow Jones Industrial Average DJIA, +0.54% gained 138.93 points, or 0.5%, to 25,848.87.

For the week, the Dow rose 1.6%, its best since Feb. 15 and the Nasdaq rallied 3.8%, the tech-centric index’s strongest since Dec. 28, while the S&P 500 added 2.9% for its biggest weekly gain since Nov. 30, according to FactSet data.

What drove the market?

Investors digested comments from Chinese Premier Li Keqiang, Beijing’s No. 2 leader after President Xi Jinping, who expressed optimism that a trade deal between China and the U.S. can be achieved that suits both parties.

He said that the parties may be several weeks away from a tariff agreement, but described China as “very responsible and reasonable.” Separately, U.S. Treasury Secretary Steven Mnuchin, speaking to reporters after his Senate testimony in front of a finance committee, said no date had been set for a meeting between Xi and Trump to complete a deal, adding that “there’s still a lot of work to do.”

Trade talks between the two of the globe’s largest economies has been chief among concerns for investors because an heated war between the two have the potential to hurt economies world-wide.

Li also addressed weakness in the world’s second-largest economy and pledged to maintain strong stimulus measures, such as lowering interest rates, cutting bank reserve ratios, and slashing taxes for consumers and businesses, sparking hopes that a stable Chinese economy could stem a recent trend of slowing global growth.

Read: Don’t look now, but global economic data is starting to surprise investors in a good way

Which data were in focus?

The New York Fed’s Empire State index fell to a reading of 3.7 in March from 8.8 in the prior month, a near two-year low. Economists had expected a reading of 10, according to a survey by Econoday.

U.S. industrial production rose by 0.1% in February, below the 0.4% increase expected by economists, according to a MarketWatch poll. January’s figure, however, was raised to show a 0.4% drop, rather than a 0.6% decline as previously estimated.

Job openings in the U.S. rose to 7.58 million in January, the third-highest level on record, according to the Labor Department.

Consumer sentiment rose in March to 97.8 from 93.8 in February, according to a preliminary reading of the University of Michigan consumer sentiment index. The reading was above the 95 level expected by economists polled by MarketWatch.

What were strategists saying?

The initial move higher was driven by Li’s comments indicating that the Chinese government was committed to taking additional stimulus measures if needed to prop up the world’s second largest economy, Brent Schutte, chief investment strategist at Northwestern Mutual Asset Management, told MarketWatch.

“You’re seeing smaller cap companies do well, which indicates a risk-on mood on Wall Street,” he added, pointing to strong consumer confidence data as reason to believe that the U.S. economy’s expansion has more room to run.

“This risk-on sentiment was mainly built on ground of a widespread optimism following President Trump’s recent statement about a ‘very responsible and reasonable China’. The U.S. president also added he will have news on a China trade deal in the next 3-4 weeks and that could lead to an extension of this year’s rally on stocks,” said Pierre Veyret, a technical analyst at ActivTrades.

Read: Why some investors say tech stocks are becoming less risky

Counterpoint: Longtime market bull sees unsettling parallel between today and March 2000

Which stocks were in focus?

Shares of Facebook Inc. FB, -2.46% fell 2.5% after the social media firm said that two senior executives were leaving the company.

Amazon Inc. AMZN, +1.55% stock rose 1.6% after KeyBanc Capital raised its rating on the stock to overweight.

Shares of Boeing Inc. BA, +1.52%  gained 1.5% following reports that it would push out a software update that could mitigate issues that led to the grounding of its 737 8 Max planes in the U.S. and abroad.

Bioscrip Inc. BIOS, -20.34% shares sank 20% after the company announced a deal to merge with privately held Option Care Enterprises Inc.

Shares of Ulta Beauty Inc. ULTA, +8.29% rallied 8.3% after the beauty-products retailer reported fiscal fourth quarter results late Thursday that surpassed expectations, while showing an increase in online sales.

How were other markets trading?

In Asia, stocks closed higher, with Japan’s Nikkei 225 NIK, +0.77% China’s Shanghai Composite Index SHCOMP, +1.04% and Hong Kong’s Hang Seng Index HSI, +0.56% all rising more that 0.5%.

European stocks also rose, with the Stoxx Europe 600 SXXP, +0.68% adding 0.7%.

In commodities markets, crude oil prices CLJ9, -0.38% ended lower, while gold GCJ9, +0.56%  settled higher, and the U.S. dollar DXY, -0.24% edged lower against its peers.

—Mark DeCambre contributed to this article

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