U.S. stocks rose at the start of trade Friday, as optimism over progress on U.S.-China trade talks appeared to overshadow concerns about a slowing economic expansion, with the S&P 500 on track to close out its strongest quarterly performance in a decade.
Looking ahead, the much-anticipated market debut of ride-hailing company Lyft Inc., is likely to be watched as a gauge of the health of public markets in the 10th year of an equity bull market.
How are benchmarks faring?
The Dow Jones Industrial Average DJIA, +0.49% rose 155 points, or 0.6%, to 25,854, while the S&P 500 index SPX, +0.36% gained 13 points to 2,828, a rise of 0.5%. The Nasdaq Composite Index COMP, +0.44% advanced 44 points, or 0.6%, to 7,710. DJIA, +0.49%
According to FactSet data, the S&P 500 is on track for a 1% weekly gain, a 1.6% monthly rise and a quarterly advance of nearly 14%. That would be the strongest quarterly rise since the second quarter of 2009.
The Dow is heading for a 1.2% weekly gain, while logging a nearly 0.4% drop for March and a roughly 12% charge higher in the first quarter.
The Nasdaq, meanwhile, is ready to log a nearly 0.9% weekly rise, while up 2.4% for the month and surging more than 17% for the first three months of the year. The small-cap Russell 2000 RUT, +0.56% however, is about to put in a 2% March drop, trimming its quarterly advance to about 15.5%.
What’s driving the market?
Apparent progress on trade talks between Beijing and Washington has been credited with buoying stocks. China’s Shanghai Composite Index SHCOMP, +3.20% rose 3.2% and the small-capitalization Shenzhen Composite Index 399106, +3.38% added 3.4%.
On Friday, U.S. Treasury Secretary Steven Mnuchin tweeted that “constructive” discussions between China’s trade envoy and officials including U.S. Trade Representative Robert Lighthizer, concluded:
.@USTradeRep and I concluded constructive trade talks in Beijing. I look forward to welcoming China’s Vice Premier Liu He to continue these important discussions in Washington next week. #USEmbassyChina pic.twitter.com/ikfcDZ10IL
— Steven Mnuchin (@stevenmnuchin1) March 29, 2019
Hopes for progress on the long-running tariff dispute has helped support a market rally in recent days, even as weaker data domestically contributed to fears that slack in growth outside the U.S. is beginning to affect the business climate.
On Thursday, the final read of gross domestic product for the last three months of 2018, a measure of goods and services produced across the economy, slowed to a 2.2% annual rate from an earlier 2.6% estimate, underscoring anxieties about fading momentum wrought from corporate tax cuts enacted in late 2017.
Falling Treasury yields, and an inversion of the yield curve, have reflected growth fears on Wall Street. The yield on the benchmark 10-year Treasury note TMUBMUSD10Y, +1.25% on Friday was at 2.41% from 2.389% Thursday, but still near a 15-month low. Bond yields and prices move in opposite directions.
Read: This time, an inverted yield curve suggests the stock market has already peaked, some analysts say
Also see: The ‘volatility cavalry’ is coming for the stock market, other assets, according to this chart
Looking ahead, shares of Lyft will make their debut after pricing at $72 a share late Thursday, valuing the company at about $24 billion. The success of the offering may help inform sentiment on Wall Street, market participants say.
Meanwhile, Britain’s efforts to exit from the European Union continued to play out, with lawmakers set to vote for a third time on Prime Minister Theresa May’s Brexit deal, which has already been rejected twice. The premier has said she would prepare to step down if her plan is approved by Parliament.
Read: Gush of government spending that boosted economy last year is fading
Also read: Brexit Brief: May on track for third defeat on her exit deal
What are strategists saying?
“Broader sentiment was boosted as well, perhaps aided by the modest recovery in Treasury yields, as well as headlines surrounding the U.S.-China trade talks. The pound was yesterday’s loser staying pressured in the aftermath of [Members of Parliament’s] unsuccessful attempt to break the Brexit impasse,” wrote Charalambos Pissouros, senior market analyst at brokerage JFD Bank, in a Friday research note.
What stocks are in focus?
Shares of Wells Fargo & Co. WFC, -1.82% fell 1.5% morning, after embattled CEO Tim Sloan unexpectedly announced his retirement effectively immediately on Thursday, as the executive was viewed as failing to repair the reputation of the scandal-ridden large-capitalization bank.
CarMax, Inc. KMX, +9.15% stock was up 6.9% after the used-car retailer reported fiscal fourth-quarter earnings that beat expectations, while revenue and same-store sales came up shy.
Shares of BlackBerry Ltd. BB, +12.84% rose 13.7%, after the cybersecurity company reported a fourth-quarter profit and revenue that beat expectations.
Celgene Corp.
CELG, +6.70%
stock rose 6.6% after the company announced a key European regulator “adopted positive opinions for two triplet regimens” based on proprietary Celgene drugs. Investors are also awaiting an opinion from Institutional Shareholder Services on whether Bristol-Myers Squibb
BMY, -1.25%
shareholders should approve a $74 billion takeover of the company.
What data are in focus?
U.S. personal incomes rose 0.2% in February after falling in the month before, the Commerce Department said Friday. The report excluded consumer spending and inflation data for February, due to the lingering effects of the government shutdown.
The PCE index for January, however, showed prices rising just 0.1%, bringing the annual inflation rate down to 1.4% from 1.8%, the lowest level since 2016 and well below the Fed’s 2% target.
The Chicago-area manufacturing sector expanded more slowly than expected, with the Chicago PMI posting a reading of 58.7, versus consensus expectations of 61.0, according to FactSet. Any reading above 50 indicates expansion.
Data on new home sales for February and consumer sentiment for March set to be released at 10 a.m.
Separately, Dallas Federal Reserve President Robert Kaplan is slated to deliver a speech at 10:30 a.m., while Randal Quarles, Fed Vice Chairman for Supervision, is expected to talk at 12:05 p.m.
How did the benchmarks fare yesterday?
On Thursday, the Dow rose 91.87 points, or 0.4%, to end at 25,717.46 and the S&P 500 index gained 10.07 points, or 0.4%, to finish at 2,815.44. The Nasdaq Composite Index closed with a gain of 25.79 points, or 0.3%, at 7,669.17.
What were other markets doing?
European equity markets are trading higher, with the Stoxx 600 Europe index SXXP, +0.31% gaining 0.5%. Japan’s NIKKEI 225 rose 0.8%, while Hong Kong’s Hang Seng Index HSI, +0.96% rose 1%.
In commodities markets, crude-oil prices CLK9, +0.84% were headed firmly higher, and gold prices GCJ9, +0.36% edged slightly into the green, while a broad measure of the U.S. dollar DXY, +0.06% tipped into negative territory.
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