THE S&P 500 rose to a new high for the year on Friday as resurgent technology stocks closed out their best week in four months with solid gains.
Financial, health care and consumer stocks also helped lift the market. The gains erased losses from last week, when the S&P 500 had its worst week of the year. The benchmark index finished at 2,822.48, up 12.6 per cent for the year and down four per cent from the record level set in September.
Technology stocks had their best week since last November. Apple ended the week with a 7.6 per cent gain, its best week since August. Industrial stocks lagged the market on Friday.
Investors bought bonds after a report on industrial production showed a second consecutive monthly decline in manufacturing in the United States (US) That sent the yield on the 10-year Treasury lower. It fell to 2.59 per cent from 2.63 late Thursday.
Despite the latest gains, global political turmoil, particularly over trade, still weighs on investors, said Katie Nixon, chief investment officer at Northern Trust Wealth Management.
“There’s so much importance placed on these geopolitical risks,” Nixon said. “They have to be resolved for the market to go forward.”
The Dow Jones Industrial Average rose 138.93 points, or 0.5 per cent, to 25,848.87. The Nasdaq composite climbed 57.62 points, or 0.8 per cent, to 7,688.53. The S&P 500’s gain was 14 points, or 0.5 per cent.
The Russell 2000 index of smaller companies picked up 3.90 points, or 0.3 per cent, to 1,553.54.
Major indexes in Europe and Asia finished higher.
US stocks have had a strong showing this year, with all the major indexes showing a gain of at least 10 per cent.
Investors appear to be encouraged by reports that the US and China could be making progress on critical negotiations aimed at resolving a trade war between the world’s two biggest economies. China’s congress endorsed an investment law that aims to address complaints, particularly from the US, that China’s system is rigged against foreign companies. The US claims China has forced companies to share technology in order to do business in the country.
Traders are also confident that the Federal Reserve will hold off on any action that could jeopardise economic growth. The central bank, which signaled in January that it was hitting pause on its rate hikes amid a slowdown in global growth and the absence of inflation pressures, is holding a meeting of policymakers next week.
Economists expect the Fed will keep rates on hold. Friday’s surge in bond purchases also indicates that investors don’t foresee the Fed raising interest rates any time soon.
“There’s no chance of a rate hike,” said Willie Delwiche, investment strategist at Baird.
Chipmakers made up six of the top 10 gainers in the S&P 500 on Friday.
Broadcom led the technology sector rally after the chip provider reported a better-than-expected rise in fourth-quarter profit and told investors that it would return USD12 billion to stockholders in 2019 through dividends and buybacks. The stock jumped 8.2 per cent.
CEO Hock E Tan expects the chip business to hit a low in the second quarter and then notch growth during the second half of the year. That assessment helped give other chipmakers a lift. Intel added 1.7 per cent and Nvidia gained 2.6 per cent.
Health care, financial and consumer stocks also notched solid gains. Biogen added 2.6 per cent, Morgan Stanley rose 1.5 per cent, and Amazon gained 1.6 per cent.
Investors also bid up shares in Ulta Beauty after the cosmetics retailer’s latest quarterly results topped Wall Street’s forecasts. The stock jumped 8.3 per cent.
Facebook dropped 2.5 per cent on news that two of the social media company’s longtime executives are resigning following the company’s recent announcement that it will shift its emphasis to private messaging from public sharing.
Shares in Tesla skidded five per cent following the electric car maker’s unveiling of its Model Y, a mid-size SUV that starts at USD39,000. The unveiling comes as Tesla tries to expand into the mainstream and cash in on the red-hot market for SUVs.
Boeing shares recovered from an early slide to gain 1.5 per cent after a report suggested the aircraft manufacturer will roll out a software fix for its 737 Max airplanes later this month.
The stock has been hammered this week after a 737 Max flown by Ethiopian Airlines crashed Sunday in Ethiopia, killing all 157 people on board. A similar Boeing flown by Lion Air crashed in Indonesia in October, killing 189 people. The US and other countries have since grounded the Boeing 737 Max 8.
Shares in Boeing fell 10.3 per cent this week. The stock is still up 14.9 per cent for the year.
The dollar fell to 111.48 Japanese yen from 111.73 yen on Thursday. The euro strengthened to USD1.1320 from USD1.1300.
The price of US crude oil slipped 0.2 per cent to settle at USD58.52 a barrel, while Brent crude dropped 0.1 per cent to close at USD67.16 a barrel. Wholesale gasoline rose 0.4 per cent to USD1.86 a gallon, heating oil slid 0.9 per cent to USD1.97 a gallon and natural gas gave up 2.1 per cent to USD2.80 per 1,000 cubic feet.
Gold rose 0.6 per cent to USD1,302.90 an ounce, silver gained 1 per cent to USD15.32 an ounce and copper added 0.5 per cent to USD2.91 a pound.