U.S. Stocks Continue Monthly Climb
18 Gennaio 2019 - 4:24PM
Dow Jones News
By Riva Gold
Signs of easing trade tensions between the U.S. and China
continued to push stocks higher Friday, putting most major indexes
on track to end the week with gains of more than 2%.
The Dow Jones Industrial Average rose 152 points, or 0.6%, to
24522, while the S&P 500 added 0.6% and the Nasdaq Composite
gained 0.5%. The gains build on an impressive climb higher over the
past month, as signs of a still-growing U.S. economy, a flexible
Federal Reserve and trade negotiation progress has encouraged
investors. Since its Dec. 24 trough, the Dow Jones Industrial
Average is up more than 12%.
Contributing to Friday's gains is optimism the U.S. would
ratchet back tariffs on Chinese imports. The Wall Street Journal
reported Thursday that U.S. Treasury Secretary Steven Mnuchin
proposed the idea of lifting some or all tariffs on Chinese imports
to advance trade talks.
A Treasury spokesman said bargaining positions "are all at the
discussion stage" and that "neither Secretary Mnuchin nor
Ambassador Lighthizer has made any recommendations to anyone with
respect to tariffs or other parts of the negotiation with
China."
Trade friction had weighed down market sentiment in recent
months amid concerns about the impact it would have on economic
growth and corporate supply chains. A Federal Reserve report this
week showed firms said they were struggling with higher input
prices, in part due to tariffs.
Kevin Gardiner, global investment strategist at Rothschild
Wealth Management, said that while longer term it is less clear
whether the outcome of the trade negotiations might be good or bad
for the U.S. economy, "anything which makes international trade
more difficult, that puts sand in the wheels of businesses and
disrupts their increasingly global supply chains has got to be bad
for business."
Benchmarks in Europe, Japan, Shanghai and Hong Kong all climbed
Friday, too, rising more than 1%.
In Europe, the trade-sensitive auto sector was one of the best
performers Friday, rising 2.3% for the day and adding to gains of
8.7% this month after a bruising selloff in late 2018.
Shares of oil-and-gas companies also rose 2% Friday as Brent
crude, the global benchmark, added 1.2% to $61.90 a barrel.
The broader Europe 600 was up 1.6% in afternoon trading, around
a six-week high and on track for weekly gains alongside its peers
in the U.S. and Asia.
The U.K.'s multinational-heavy FTSE 100 lagged behind for the
week amid a strengthening currency and ongoing uncertainty around
Brexit.
Hong Kong's Hang Seng rose 1.3% Friday amid solid gains in
shares of health-care companies, while Japan's Nikkei Stock Average
added 1.3%.
Corporate earnings have also been a source of support for the
market this week and continued to drive moves in individual
companies on Friday.
In Europe, shares of Europe's Ryanair Holdings fell 1.7% after
Ryanair lowered its full-year profit guidance and said further cuts
could be on the way depending on how Brexit develops.
Rio Tinto was up 1.1% after the mining giant forecast a further
rise in exports in the year ahead.
In the U.S., SunTrust Banks was a big gainer among individual
stocks, rising 2% after it reported an increase in revenue and a
drop in costs.
Shares of Netflix fell 1.9% after the streaming-video giant said
revenue grew less than analysts expected, while American Express
moved 2.5% lower despite posting its highest annual profit and
revenue.
Overall, slightly more companies than usual have been beating
analysts' earnings estimates so far for the fourth quarter,
according to data from Refinitiv.
That comes against a significantly lowered bar, however,
following steep downgrades to fourth-quarter and 2019 earnings
forecasts in recent weeks.
"Analysts' [earnings] revision momentum has gone off a cliff,"
said David Bowers, who heads up research at Absolute Strategy
Research. For stocks and the broader environment for risky assets
"we think we're not out of the woods yet," he said.
--Corrie Driebusch contributed to this article
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
January 18, 2019 10:09 ET (15:09 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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