Benchmarks closed in the green on Friday, buoyed by positive developments on the U.S. - China trade war front. China vowed to make efforts to boost U.S. exports to the country. Meanwhile, Trump declared a national emergency over funding for his border wall along America’s southern border with Mexico. For the week, however, the three major benchmarks ended in the positive territory. Markets remained closed on Monday in observance of Presidents' Day.
The Dow Jones Industrial Average (DJI) increased 1.7%, to close at 25,883.25. The S&P 500 increased 1.1% to close at 2,775.60. The tech-laden Nasdaq Composite Index closed at 7,472.41, gaining 0.6%. The fear-gauge CBOE Volatility Index (VIX) decreased 3.5% to close at 15.65. Advancers outnumbered decliners on the NYSE by a 3.76-to-1 ratio. On Nasdaq, a 2.69-to-1 ratio favored advancing issues.
How Did the Benchmarks Perform?
The Dow amassed 443.9 points to end the session in the positive territory. Gains for the Dow were buoyed by a surge in the shares of JPMorgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS) , which gained 3.1% each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 added 30 points to also end in the green. All of the S&P 500’s major segments ended in the positive territory, with financials and energy shares leading the advancers. The Financial Select Sector SPDR ETF (NYSE:XLF) and the Energy Select Sector SPDR ETF (NYSE:XLE) increased 2.1% and 1.6%, respectively. While energy shares rose due to higher oil prices, the financials witnessed broad-based gains.
The Nasdaq gained 45.5 points to end in the green. The tech-laden index almost ended its longest streak in the bear market, since 1991.
Positive Developments on Trade War Front Boosts Markets
The latest round of trade negotiations between the United States and China ended on Friday. Negotiators from both countries remained undecided on a few key issues. However, a fresh round of talks is slated to begin this week in Washington.
Key issues such as America’s allegation that China forces U.S. firms to share technology with the Asian country and its industrial policies which benefit only domestic firms in China, remained in the spotlight. China has denied such allegations and has instead chosen to focus on ways to improve America’s exports to China. The Asia giant is planning to increase its semiconductor purchase from the United States to a total of $200 billion over the next six years.
China believes such initiatives would ease up trade tensions between two of the world’s biggest economies and encourage President Donald Trump to extend the trade truce deadline further. Such developments boosted market sentiment as market watchers speculated that both the parties were eager to reach a deal before the March 1 deadline.
Trump Declares National Emergency Over Border Wall Funding
Investors closely followed the political drama that unfolded at the White House after Trump declared a national emergency on Friday. This motive behind such a move is to secure more funding for building the border wall along America’s southern border with Mexico. Moreover, Trump also signed a spending bill on Friday which prevented another shutdown.
Economic Data
On the economic data front, U.S. industrial production fell 0.6% in January, for the first time in the last eight months. Meanwhile, capacity utilization for the month came in at 78.2, below the consensus estimate of 78.7.
The cost of imported goods decreased for the third month on the trot to 0.5% in January. Meanwhile, a shutdown delayed report showed that U.S. business inventories sank 0.1% in November.
Weekly Roundup
For the week, the Dow, the S&P 500 and the Nasdaq gained 3.1%, 2.5% and 2.4%, respectively. While this marked the Dow’s best streak of weekly gains since November 2017, it was Nasdaq’s best stretch of weekly winnings since August 2016.
U.S. markets closed at their highest levels for 2019 on Tuesday. Stocks soared after a temporary deal to provide funding for a U.S. – Mexico barrier was reached between Republican and Democratic lawmakers. Further, the rally continued for the rest of the week, buoyed by positive developments on the trade war front. Moreover, President Trump’s statement which negated the possibility of a second government shutdown also boosted investors’ confidence.
Stocks That Made Headlines
Transocean Swings to Loss in Q4, Tops Sales Estimates
After coming up with profitable results in the third quarter, Transocean Limited (NYSE:RIG) disappointed investors by reporting a net loss in the fourth quarter of 2018. (Read More)
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JPMorgan Chase & Co. (JPM): Free Stock Analysis Report
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Transocean Ltd. (RIG): Free Stock Analysis Report
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