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Stocks Rise on Trade Progress 10/11 16:30
The S&P 500 finished with its first weekly gain in four weeks Friday as
investors welcomed a thaw in the punishing trade war between the U.S. and China.
(AP) -- The S&P 500 finished with its first weekly gain in four weeks Friday
as investors welcomed a thaw in the punishing trade war between the U.S. and
China.
After two days of negotiations in Washington, the U.S. agreed to suspend a
planned hike in tariffs on $250 billion of Chinese goods that had been set to
kick in Tuesday. Beijing, meanwhile, agreed to buy $40 billion to $50 billion
in U.S. farm products.
Word of the trade concessions filtered out in the last half-hour of trading
and pushed the Dow Jones Industrial Average 517 points higher, though the
momentum faded near the close.
"The market is welcoming any progress here, because (trade) has been the
biggest overhang on growth," said Ben Phillips, chief investment officer at
EventShares. "Any sort of deal, even if it's a super light, mini-deal, still
gets the market constructive and saying, 'OK, we're moving in the right
direction.'"
The S&P 500 index closed higher for the third-straight day, adding 32.14
points, or 1.1%, to 2,970.27. Earlier it had been up 1.9%. The Dow rose 319.92
points, or 1.2%, to 26,816.59.
The Nasdaq gained 106.26 points, or 1.3%, to 8,057.04. The Russell 2000
index of smaller company stocks outpaced the broader market, climbing 26.54, or
1.8%, to 1,511.90. The indexes all notched gains for the week.
Treasury yields rose as investors felt less need for safety and dumped
bonds. The yield on the 10-year Treasury, a benchmark for mortgages and many
other kinds of loans, jumped to 1.73% from 1.65% late Thursday.
The rally got going early, reflecting optimism among investors that
Washington and Beijing would reach at least a limited deal on trade. The
U.S.-China trade dispute has been a drag on economic growth and slowed
manufacturing around the world.
Investors got encouragement from President Donald Trump, who said "Good
things are happening," before meeting with Chinese Vice Premier Liu He for
trade talks at the White House.
Later in the day, after emerging from the meeting to announce the partial
trade deal, Trump told the Chinese delegation "You're very tough negotiators."
The White House said the two sides made some progress on the thornier
issues, including China's lax protection of foreign intellectual property. But
more progress will have to be made on key differences in later negotiations,
including U.S. allegations that China forces foreign countries to hand over
trade secrets in return for access to the Chinese market.
Markets around the world have swung sharply on every morsel of progress or
dissonance dribbling out about the U.S.-China trade war.
The concessions agreed upon by the U.S. and China Friday mark a sharp
turnaround after expectations were lowered earlier in the week when the U.S.
blacklisted a group of Chinese technology companies over alleged human rights
violations.
The Trump administration has already raised tariffs on more than $360
billion worth of Chinese imports, but the stakes were set to rise. The U.S. had
planned to raise tariffs on $250 billion in Chinese imports from 25% to 30%
Tuesday. Those are now suspended. But the two sides did not mention tariffs on
$160 billion of goods scheduled for Dec. 15.
Technology stocks, which often do lots of business with China, helped power
the indexes higher Friday. Apple climbed 2.7%, and edged ahead of Microsoft as
the most valuable company in the S&P 500. Broadcom added 2.4%.
Industrial stocks also notched solid gains. Caterpillar climbed 4.7% and
farm equipment maker Deere gain 1.9%.
The jump in bond yields helped send bank stocks higher on expectations of
bigger profits for making loans. JPMorgan Chase rose 1.7%, and Bank of America
gained 1.6%.
Stocks jumped across Europe on hopes that the United Kingdom and European
Union can reach a trade deal ahead of London's pending exit from the bloc. The
German DAX surged 2.9%, while the CAC 40 in France jumped 1.7%. The FTSE 100 in
London rose 0.8%, held back in part by a stronger British pound, which adds
pressure on British exporters.
A missile strike on an Iranian tanker revived concerns about oil supplies
and pushed energy prices higher. The explosion follows other attacks earlier
this year on tankers in the Persian Gulf, through which about 20% of all oil
traded worldwide passes.
Benchmark crude oil rose $1.15 to settle at $54.70 a barrel. Brent crude
oil, the international standard, gained $1.41 to close at $60.51 a barrel. The
rise in energy prices lifted oil and energy services companies. Exxon rose 1.1%
and Schlumberger climbed 4.5%.
Fastenal surged 17.2% after the maker of fasteners and other industrial
products reported surprisingly good first quarter profit and revenue. The
company reported solid growth from its industrial vending and onsite services
businesses.
Newmont Goldcorp was among the biggest decliners in the S&P 500 after gold
prices fell $12.10, or 0.8%, to $1,482.70 per ounce, as investors shifted to
more risky holdings. Newmont shares slid 3.4%.
Investors will be focusing on the health of Corporate America next week as
companies begin reporting their results for the third quarter. Expectations are
generally low, with analysts forecasting a drop of 4.1% from a year ago. The
results, plus what CEOs say about their spending and revenue forecasts, should
give a better picture of the economy's potential direction.
"You're going to see a little soft earnings (results) this quarter, is our
expectation, largely on the manufacturing and global companies, but also a
little softness on services," Phillips said.
In other commodities trading Friday, wholesale gasoline rose 2 cents to
$1.64 per gallon. Heating oil climbed 4 cents to $1.96 per gallon. Natural gas
fell 1 cent to $2.21 per 1,000 cubic feet.
Silver fell 6 cents to $17.46 per ounce and copper rose 1 cent to $2.62 per
pound.
The dollar rose to 108.52 Japanese yen from 107.91 yen on Thursday. The euro
strengthened to $1.1041 from $1.1006.
(BE)
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