Stocks close out rocky quarter with solid gains

WALL Street ended a wobbly week with broad gains on Friday, closing the books on June with its biggest monthly gain since January.

June marked a sharp about-face from May, when traders fled to safer holdings because of increased anxiety over the trade war between the United States (US) and China, and signs of slowing global economic growth.

Despite lingering worries over trade, investors pushed stocks higher for much of this month after the Federal Reserve raised expectations that it is prepared to cut interest rates if needed to keep the economy growing. That drove the benchmark S&P 500 to an all-time high last week, though it has retreated slightly from that mark.

Even after the roller-coaster quarter, investors are in good shape so far this year. The S&P 500 is up 17.3 per cent and the technology-heavy Nasdaq has gained 20.7 per cent.

“It hasn’t been maybe as healthy a rally as we saw in the first (quarter),” said Brian Nick, chief investment strategist at Nuveen. “When you look back 10 years from now it’s not going to look like the sort of volatile period where we had this good April, terrible May, and good June. It’s just going to look like a quarter where you know you made money in stocks, you made money in bonds.”

On Friday, the S&P 500 index rose 16.84 points, or 0.6 per cent, to 2,941.76. The index ended the month with a 6.9 per cent gain.

The Dow Jones Industrial Average gained 73.38 points, or 0.3 per cent, to 26,599.96. The Nasdaq composite rose 38.49 points, or 0.5 per cent, to 8,006.24.

File photo shows traders work on the floor of the New York Stock Exchange. – AP

Smaller company stocks were big gainers for the second straight day. The Russell 2000 index climbed 20.02 points, or 1.3 per cent, to 1,566.57.

Every major index finished the week with a loss, but ended June with solid gains.

Bond prices were little changed. The yield on the 10-year Treasury note held at two per cent.

The market ended the final week of June with a two-day winning streak. A wave of selling swept over the market earlier in the week as traders shifted money to less risky holdings like US government bonds while remaining cautiously optimistic about this weekend’s meeting between President Donald Trump and President Xi Jinping of China.

The meeting, set to take place in Japan, will mark the first time the two leaders meet since the trade war escalated following 11 rounds of negotiations.

Investors are hoping the talks put the world’s two biggest economies on track to resolve their trade dispute, which has led to costly tariffs imposed by both countries on each other’s goods. Wall Street is worried the fallout from the tariffs could hurt global economic growth and corporate profits. The dispute has prompted the Federal Reserve to say it is willing to cut interest rates if the dispute hurts the US economy.

“Investors need to recognise that the trade situation is unlikely to improve,” said Chief Global Market Strategist at Invesco Kristina Hooper. “The best we can hope for is an agreement to continue talks.”

Banks led the way higher Friday after the Federal Reserve late Thursday approved plans by the country’s 18 biggest banks to return more money to shareholders. The approvals were part of the Fed’s annual checkup of the banking system. JPMorgan Chase rose 2.7 per cent and Bank of America climbed 2.8 per cent.

Industrial and energy stocks also notched strong gains. Union Pacific rose 1.9 per cent while oil companies including Chevron and Exxon rose.

Secondhand-fashion online retailer RealReal jumped on its first day of trading. The company, which offers a marketplace for discounted Gucci and other luxury goods, surged 44.5 per cent after its IPO hit the market at USD20 per share.

Major stock indexes in Europe rose, while energy futures closed mostly lower. – AP