Healthcare and technology companies on Friday helped lift US stocks higher, breaking a three-day losing streak for the S&P 500 and giving the benchmark index its fifth consecutive weekly gain.
Renewed optimism for a potential resolution to a US-China trade conflict helped put investors in a buying mood following a Bloomberg story saying that US officials were preparing a deal that could be signed within a month.
The trade war between the world’s largest economies has raised prices for consumers and companies.
It has also deepened concerns that escalating tariffs could worsen the global economy’s slowdown.
Even so, investors’ jitters over trade and signs of a slowing global economy have been eased by confidence in the prospects for steady US growth and an increasingly hands-off US Federal Reserve.
That has fueled the market’s strong start to this year following its steep sell-off at the end of last year.
“Clearly, the tariffs negotiations are moving in the right direction, as far as the market is concerned, and that’s positive,” Prudential Financial Inc chief market strategist Quincy Krosby said.
“The other positive is that the Fed remains on hold ... and they have been telegraphing that they remain patient on interest rate hikes,” Krosby added.
The S&P 500 on Friday climbed 19.20 points, or 0.7 percent, to 2,803.69, its first close above 2,800 points since Nov. 8 last year and a 0.4 percent increase from a close of 2,792.67 on Feb. 22.
The index has notched a weekly gain in nine of the past 10 weeks.
The Dow Jones Industrial Average on Friday rose 110.32 points, or 0.4 percent, to 26,026.32, nearly flat from 26,031.81 a week earlier.
The NASDAQ Composite on Friday gained 62.82 points, or 0.8 percent, to 7,595.35, rising 0.9 percent from a close of 7,527.55 on Feb. 22.
The Russell 2000 index of smaller companies on Friday picked up 14.09 points, or 0.9 percent, to 1,589.64, mostly flat compared with a close of 1,590.06 a week earlier.
The indices got off to a strong start early in the day, then lost ground after a report showed that manufacturing growth slowed last month.
However, that pullback did not last, a reflection of how traders have remained confident in the strength of the US economy, despite weak economic reports.
Consumer spending in December last year took its biggest tumble in nine years. Disappointing retail sales were another sign that growth slowed at the end of last year.
Optimism over a potential US-China trade deal marked a change from earlier in the week, when US Trade Representative Robert Lighthizer raised doubts about progress in the negotiations.
Speaking to US lawmakers, Lighthizer said that much still needed to be done before the sides could reach an agreement over Beijing’s technology strategy and other issues.
Washington has accused Beijing of stealing foreign companies’ technology or pressuring them to hand it over.
US President Donald Trump has held off on a threat to impose higher tariffs on US$200 billion of Chinese products as negotiations continue.
While the market’s gains already reflect investors’ optimism for a US-China trade deal, stocks could get a further boost from an official resolution to the dispute, US Bank senior portfolio manager for private wealth management Eric Wiegand said.
“If we were able to see a successful conclusion to the negotiations, that could be a near-term catalyst,” he said.
Healthcare and technology companies accounted for much of the market’s gains on Friday.
Celgene Corp rose 3.4 percent, while Western Digital Corp gained 2.7 percent.
A mix of company earnings and deal news also caught investors’ attention.
Several supermarket operators declined after the Wall Street Journal reported that Amazon is planning to open dozens of grocery stores in several US cities.
The e-commerce giant has been making a big push into brick-and-mortar stores, buying up the Whole Foods grocery chain in 2017 and opening cashier-less convenience stores nationwide.
The news sent Amazon shares 1.9 percent higher.
Supermarket operator Kroger Co slid 4.5 percent, while Walmart Inc, which also sells groceries, dropped 1.1 percent and Sprouts Farmers Market Inc fell 0.5 percent.
Investors bid up shares in Foot Locker Retail Inc after the footwear and athletic apparel retailer blew past investor expectations for the fourth quarter of last year and forecast double-digit profit growth for this year. The stock climbed 6 percent.
Tesla Inc tumbled 7.8 percent after CEO Elon Musk said that the electric car maker is unlikely to turn a profit in the first quarter.
The company also began selling a US$35,000 version of its Model 3, which previously cost at least US$42,900.
Caesars Entertainment Corp gained 4.1 percent after the casino operator said that it would replace three board members with directors chosen by billionaire activist investor Carl Icahn.
Additional reporting by staff writer
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