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US-China Trade Optimism Pushes S&P 500 Closer to Record High

stock market update

Stocks rose following some solid company earnings reports and signs of progress in resolving the U.S.-China trade dispute and more in Friday’s Stock Market Update.

The gains Friday put the S&P 500 close to the all-time closing high it reached in July. The benchmark index also posted its third straight weekly gain.

Technology, financial and communications services stocks powered the rally.

Intel soared 8.1% after turning in standout results for its latest quarter. Fellow chipmakers, including Nvidia, also made strong gains.

The buying accelerated after the U.S. Trade Representative’s office issued a statement saying the discussions with China’s negotiating team “made headway.”

The trade conflict, which has led both sides to impose billions in tariffs on each other’s goods, has roiled financial markets and stoked worries that the dispute could tip the global economy into a recession.

Those worries eased in recent weeks, after Washington and Beijing worked to calm tensions and then resumed negotiations.

That’s allowed investors to focus on company earnings reports the past two weeks. Traders want to get a sense of how Corporate America is faring against the backdrop of the costly trade war between the world’s two biggest economies.

Earnings reports so far have mostly exceeded Wall Street analysts’ modest expectations. However, many of those that delivered improved results for the quarter have also issued disappointing profit outlooks. Until this week, the market had a mostly muted reaction to company earnings, often closing the day with a modest gain or loss.

Charter Communications gained 6.2% after reporting solid financial results. The cable operator made some of the strongest gains among its fellow communications companies.

Banks rose as bond yields moved higher. The yield on the 10-year Treasury rose to 1.8% from 1.77% late Thursday.

Consumer product makers, utilities and real estate companies lagged the market.

STOCK MARKET UPDATE

KEEPING SCORE: The S&P 500 rose 12 points, or 0.4%, to 3,022. The Dow Jones Industrial Average rose 152 points, or 0.6%, to 26,958. The Nasdaq added 57 points, or 0.7%, to 8,243.

NOT SO PRIME: Amazon fell 1.1% after releasing disappointing third-quarter profits and a weak sales forecast for the holiday shopping season. The company had higher costs as it adds workers in its warehouses and more software engineers for its cloud computing business.

REVVING ENGINES: General Motors rose 2.6% following a key vote at its biggest factory to end a strike that has shut down operations for 40 days. The overwhelmingly positive vote from production workers at GM’s SUV plant in Arlington, Texas all but assures the contract will be ratified companywide.

EARNINGS SCORE: Companies have so far reported surprisingly good profits this earnings season, despite another forecast for a sharp contraction. Just over 39% of companies in the S&P 500 have reported results and 78% beat analysts’ forecasts, according to FactSet.

The results have tempered initial forecasts for a profit contraction of more than 4%, but the market hasn’t gained much ground.

Investors have been here before. Corporate profits were expected to shrink significantly during the first and second quarters, but surprisingly good results eventually led to a very slight overall contraction.

EARNINGS ON DECK: Some of the biggest names in technology and industry will release their results next week. Alphabet, Google’s parent company, will help kick things off on Monday. Drugmakers Merck and Pfizer will report results on Tuesday, as will automaker General Motors.

Apple will release its results on Wednesday, along with Facebook. Exxon will report results on Friday.

ECONOMY UPDATE: Investors are also preparing for a deluge of economic data next week, including the Federal Reserve’s latest statement on interest rates, which is set for Wednesday. The latest employment figures and consumer confidence data will also be closely watched as gauges of the economy’s health.

The economic data, along with a steady flow of important corporate earnings reports, could inject more volatility into the markets.

Reports on home prices and sales, along with the latest data on consumer confidence, are expected Tuesday.

The Commerce Department will report third-quarter gross domestic product on Wednesday and personal income and spending data on Thursday.

The Labor Department’s employment report for October will be released on Friday.

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