U.S. stock benchmarks ended little changed Friday as investors looked ahead to a three-day weekend.
For the week though, equity indexes ended with strong gains as the markets largely shrugged off rising U.S.-China tensions and remained optimistic that the impact of coronavirus on corporate earnings will be relatively short-lived.
How did the benchmarks trade?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.34% fell 8.96 points, or less than 0.1%, to end at 24,465.16, weighed by shares of Caterpillar Inc . /zigman2/quotes/203434128/composite CAT +0.53% and Chevron Corp. . Meanwhile, the S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.60% closed 6.94 points higher, or 0.2%, at 2,955.45. The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +2.26% traded 0.4% higher to finish the week at 9,324.59, a gain of 39.71 points.
Meanwhile, the Russell 2000 index /zigman2/quotes/210598147/delayed RUT +1.59% , representing smaller-capitalization companies, gained 7.97 points, or 0.6% to close at 1,355.53
For the week, the Dow climbed 3.3%, the S&P 500 advanced 3.2% and the Nasdaq Composite rose 3.4%. The Russell 2000 notched a 7.8% weekly rise.
What drove the market?
U.S. equities on Friday held on to the gains they amassed for the week, with returns pegged to optimism about businesses reopening in many states—all 50 are engaged in some stage of business-restarting plans. President Donald Trump said Thursday that he wouldn’t move to shut down the U.S. economy to stem the spread of a potential second wave of COVID-19.
“We are going to put out the fires. We’re not going to close the country,” he said, speaking at a Ford Motor Co. /zigman2/quotes/208911460/composite F -2.25% factory in Michigan.
U.S. equities are increasingly pricing in a reopening of the economy and a slow but steady rebound in economic activity, Sebastien Galy, Nordea Asset Management’s senior macro strategist, wrote in a Friday research note.
“Consensus is for either a U or W shaped and we are no different from this. What we expect is that the simple realization of this consensus view will be welcomed by the market as more dire scenarios are priced out,” wrote Galy.
Equity investors are also anticipating a vaccine will be developed for COVID-19, which has infected more than 5 million people and claimed 330,000 lives world-wide, according to data compiled by Johns Hopkins University. White House infectious disease expert, Dr. Anthony Fauci, said he remains confident that a remedy for the illness can be achieved this year, speaking with NPR’s Noel King in a Friday interview .
He also said that vaccine candidates being worked on by the likes of Moderna Inc . /zigman2/quotes/205619834/composite MRNA +6.60% looked promising.
Former Vice President Joe Biden during a Friday CNBC interview said that economic recovery from the coronavirus pandemic is a “long way away.” The presumptive Democratic presidential nominee told the business network that “the way to fix the economy is get the public health response correct.”
However, the week has also been colored by worries about U.S.-China relations, which have deteriorated in recent weeks, capping further gains for risk assets.
Given the uncertainty created by the coronavirus pandemic, China dropped its GDP target for the first time since adopting the practice in 1994, but of more concern officials suggested the government is preparing to impose a national-security law on Hong Kong in response to last year’s pro-democracy protests.