Stocks closed higher on Wall Street Friday, led by gains in financial companies, as the market rebounds from steep losses a day earlier and more in Friday’s Stock Market Update.
Financial companies led the buying as the yield on the 10-year Treasury note reversed part of a steep slide a day earlier. Rising yields boost interest rates on loans, which makes lending more profitable.
Intuit gained 6.7% after the maker of TurboTax reported quarterly earnings and revenue that topped expectations.
Technology stocks notched solid gains, reversing their sell-off a day earlier. Health care companies also rose.
The market has swung between gains and losses all week as investors weighed the prospect of a prolonged trade war between the U.S. and China. Trading has been volatile since the dispute escalated earlier this month, with both sides raising tariffs on each other’s goods.
Friday’s gains were set to snap a two-day losing streak for the S&P 500, as investors saw opportunity after the previous days’ wave of selling.
“Today you’re just seeing a rebound, really almost across the board, so that tells you yesterday everything was just being sold with no rhyme or reason,” said Ben Phillips, chief investment officer at EventShares.
STOCK MARKET UPDATE
KEEPING SCORE: The major indexes ended with their third straight week of losses. Investors have been worrying about the escalating trade war between the U.S. and China, though things were quiet on the trade front early Friday. The Dow rose 95 points, or 0.4%, to 25,585. The S&P 500 added 3 points, or 0.1%, to 2,826. The Nasdaq gained 8 points, or 0.1%, to 7,637. The yield on the 10 year Treasury rose to 2.32% after slipping to 2.29% Thursday, its lowest level in more than a year.
Major stock indexes in Europe finished broadly higher.
The market’s rebound came ahead of a three-day holiday weekend. U.S. stock markets will be closed Monday in observance of Memorial Day.
The resumption of trade hostilities this month has interrupted a market rally that saw the S&P 500 wipe out the fourth quarter’s sharp decline and hit a new high. The index is down 4% so far in May, though it’s still sporting a gain of 12.8% for the year.
The U.S. and China concluded their 11th round of trade talks earlier this month with no agreement. Instead, the U.S. moved to increase tariffs on Chinese goods, prompting China to reciprocate. The trade dispute escalated further after the U.S. proposed restrictions on technology sales to China, though it has temporarily backed off.
President Donald Trump said Thursday that he expects to meet with his Chinese counterpart Xi Jinping at a summit next month in Japan. Both sides have expressed a willingness to resume negotiations, while at the same time ratcheting up antagonistic rhetoric, leaving investors confused about what happens next.
Investors will likely be stuck dealing with a volatile market until there are more solid developments on the U.S.-China trade dispute.
“The lesson learned lately is that nobody knows,” said Craig Birk, chief investment officer at Personal Capital.
He said people are starting to balance their expectations as they realize that the trade dispute could last much longer than initially anticipated.
Scott Wren, senior global equity strategist at Wells Fargo Investment Institute, said the market still expects a deal and the negotiations will have an effect on global growth. But, the trade dispute is only one piece of the bigger picture, as the U.S. economy grows at a solid rate and the global growth picture has improved.
Technology companies have borne the brunt of the now monthlong downturn as they face the possibility of restricted sales to Chinese companies. On Friday, HP rose 4.3% and Intuit climbed 6.7% after reporting solid profits and issuing a surprisingly good forecast.
Health care stocks and financial companies also notched solid gains. Medtronic rose 1.4%, Prudential Financial gained 1.7% and Capital One Financial added 1.7%.
Utilities lagged the broader market as traders shifted their money into riskier holdings. That marked a reversal from a day earlier, when investors bought up utilities, bonds and other safe-play holdings. The yield on the 10 year Treasury rose to 2.32% after slipping to 2.29% late Thursday, its lowest level in more than a year.
Consumer staples, which include beverage and packaged food makers, lagged the market. Constellation Brands slid 3.6%.
Foot Locker tumbled 15.9%, erasing all its gains for the year. The shoe store reported disappointing first quarter financial results and trimmed its profit forecast.
The company’s profit and revenue both fell short of forecasts, along with a key sales measure used by retailers. The company now expects full-year earnings per share to rise by high-single digits, a more reserved outlook than the double-digit increase it had forecast earlier.
Foot Locker, retailers and shoe companies all face higher costs if the U.S. goes ahead with additional tariffs on Chinese goods that would impact footwear. The company and others have sent a letter to President Donald Trump urging him not to impose these additional tariffs.
Hibbett Sports surged 20.8% after the sporting goods retailer blew past Wall Street’s profit expectations and raised its forecast for the year.
The solid first quarter results included a surge in a key sales measure that also dominated analysts’ forecasts.
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