U.S. stocks closed at fresh record highs on Friday on revived hopes for a U.S. - China trade deal despite mixed economic data.
The Dow hit 28,000 for the first time after posting a fourth straight week of gains, while the S&P500 index rallied for a sixth week, its longest winning streak since November 2017.
How are the major benchmarks faring?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.36% rose 222.93 points, or 0.8%, to 28,004.89, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.45% gained 23.83 points, or 0.77%, to trade at 3,120.46. The Nasdaq Composite index /zigman2/quotes/210598365/realtime COMP +0.52% was up 61.81 points, or 0.73%, to 8,540.83.
Year-to-date the Dow is up 20.05%, the S&P 500 has gained 24.48% and the Nasdaq 28.72%
On Thursday, the Dow ended marginally lower, falling 1.63 points to 27,781.96, a day after eking out a record close. The S&P 500, meanwhile, tiptoed further into uncharted territory with a rise of 2.59 points, or 0.1%, to end at 3,096.63 — it’s 21st record close of 2019. The Nasdaq Composite edged 3.08 points lower, a decline of less than 0.1%, to finish at 8,479.02.
What’s driving the market?
Equities markets have posted gains this week as investors remain hopeful that positive developments in U.S.-China trade relations will soon justify recent record highs for the major stock indexes.
“Investors continue to hang onto every word associated with the U.S.-China trade war,” said Russ Mould, investment director at AJ Bell. “White House economic adviser Larry Kudlow reportedly said that current negotiations between the two countries are ‘very constructive’, which was enough to drive stock markets up across the U.K., mainland Europe and most of Asia.”
Kudlow on Thursday said negotiators are getting close to an agreement, but that President Donald Trump wasn’t yet ready to sign off. Trump “likes what he sees, he’s not ready to make a commitment, he hasn’t signed off on a commitment for phase one, we have no agreement just yet for phase one,” he said at a Council on Foreign Relations event, according to The Wall Street Journal .
The first phase of an agreement that may have as many as three phases will be “relatively limited in scope,” with the major focus being on “current trade” and whether China is willing to commit to $40 billion to $50 billion of agriculture purchases, Commerce Secretary Wilbur Ross told Fox Business on Friday.
U.S. economic data also provided some evidence that consumers remain willing to spend, though at a slower pace than earlier this year. U.S. retail sales growth rebounded in October, rising 0.3% after a 0.3% decline in September, above the 0.2% growth expected by economists surveyed by MarketWatch. Excluding autos and gasoline sales, however, sales rose 0.1%, below the 0.4% consensus forecast.
But U.S. industrial output fell by the most in 17 months in October, down 0.8%, worse than the 0.5% decline expected by economists polled by MarketWatch. Industrial capacity in use slumped to 76.7 in October, the lowest level in slightly more than two years.
“Net net, monetary policy is in a good place but the road ahead for the economy looks rockier with the manufacturing recession deepening and consumers spending less this quarter than they did earlier in the year,” MUFG chief economist Chris Rupkey said. “The question is whether the economy is in a good place and whether stock market investors are blithely ignoring today’s real economic data news in favor of their hopes and dreams for a better tomorrow with a phase one U.S.-China trade deal in sight.”