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 increase 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 companies 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 bench mark 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."
Stocks of technology companies, 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%.
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.
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%.
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.
"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.
Information for this article was contributed by Damian J. Troise of The Associated Press.
Business on 10/12/2019