US close: Financials outperform on trade talk optimism
By Alexander Bueso
Date: Monday 18 Feb 2019
(Sharecast News) - Shares on Wall Street finished higher on Friday as investors considered the prospect of more Sino-US trade talks next week.
By the closing bell, the Dow Jones Industrial Average was ahead by 1.74% to 25,883.25, while the S&P 500 had picked up 1.09% to 2,775.60 and the Nasdaq Composite added 0.61% to finish at 7,472.41.
From a sector standpoint, the strongest performance was seen in the following industry groups: Full line insurance (3.85%), Business Training (3.52%), Marine Transportation (2.85%), Home Improvement Retailers (2.53%) and Banks (2.41%).
It was a strong session throughout, with the Dow Industrials jumping by over 300 points right out of the gate, as investors chose to look on the bright side regarding trade relations between the US and China, amid news that negotiations were set to continue over the next week, in Washington DC.
Together with talk that they might yield some sort of 'memorandum of understanding' between Washington and Beijing, and given the upcoming long weekend in the States, that may have forced some traders to cover 'shorts' in a hurry.
Nonetheless, US trade negotiator Robert Lighthizer said that the two nations still needed to make headway on some "very, very important and very difficult issues".
Echoing that view, CMC Markets UK's David Madden said: "US-China trade talks made a little progress in Beijing last week, and the Chinese president, Xi Jinping, is reported to have said he is hoping both sides can reached an agreement that is mutually beneficial. The trade negotiations will continue this week in the US, and dealers are viewing that as a positive step."
On a more constructive note, the day before strategists at Bank of America-Merrill Lynch had pointed to fund managers' still elevated cash positions and caution on the part of their private clients to recommend staying in the 'pain trade'; that is to say, they expected shares to continue advancing.
Elsewhere, Trump was due to sign a compromise spending deal meant to avert another government shutdown, but also to declare a national emergency in an effort to secure funds to build a Mexico border wall.
"After a few days of discussion in Beijing, President Xi Jinping has said that the talks will continue in Washington next week, both sides still chasing that elusive deal before the ceasefire ceases at the start of March," said Spreadex analyst Connor Campbell.
"This faint whiff of progress was enough to cause the markets to reverse the losses that had come after the double-hit of Donald Trump's 'national emergency' chat and China's inflation-slowdown."
In corporate news, shares in consumer goods group Newell Brands dropped 20.89% at the bell after its fourth-quarter profit beat analysts' expectations but sales were a miss.
PepsiCo bubbled up 2.9% in early trade as its quarterly earnings and revenue came in in line with analysts' forecasts but the company warned of weaker-than-expected earnings for this year.
Elsewhere, Deere & Co was down 2.11% after the tractor maker's first-quarter profit fell short of estimates on the back of higher costs and worries about a trade war.
On the data front, the Empire State manufacturing index, which gauges the health of the New York State manufacturing sector rose 4.9 points in February to 8.8 - above economists expectations of 7.6 reading.
Elsewhere, the preliminary University of Michigan consumer sentiment index for February bounced back to 95.5 in February from the 91.2 recorded in January - its worst reading since November 2016.
Economists had pencilled in a reading of 94.
"The early February gains reflect the end of the partial government shutdown as well as a more fundamental shift in consumer expectations due to the Fed's pause in raising interest rates," said Richard Curtin, the survey's chief economist.
In other data news, the cost of imported goods fell for a third straight month in January, reflecting an easing of inflation across the States.
The import price index fell 0.5% last month, following on from even bigger drops of 1% in December and 1.7% in November.
Lastly, industrial production sank 0.6% in January, the first drop in eight months and below expectations on the Street of a flat reading.
Despite the decline, production remains 3.8% higher, while capacity utilisation fell 0.6 points to 78.2%, according to the Federal Reserve.
Dow Jones - Risers
Goldman Sachs Group Inc. (GS) $198.56 3.10%
JP Morgan Chase & Co. (JPM) $105.55 3.06%
Dowdupont Inc. (DWDP) $54.24 3.00%
United Technologies Corp. (UTX) $127.76 2.92%
Caterpillar Inc. (CAT) $136.20 2.70%
Home Depot Inc. (HD) $192.42 2.51%
McDonald's Corp. (MCD) $179.97 2.33%
Unitedhealth Group Inc. (UNH) $271.13 2.19%
Verizon Communications Inc. (VZ) $55.18 2.13%
Cisco Systems Inc. (CSCO) $49.43 2.13%
Dow Jones - Fallers
Coca-Cola Co. (KO) $45.24 -0.77%
Apple Inc. (AAPL) $170.42 -0.22%
Procter & Gamble Co. (PG) $98.48 0.02%
American Express Co. (AXP) $107.38 0.71%
Nike Inc. (NKE) $85.38 0.83%
Chevron Corp. (CVX) $119.27 1.01%
Pfizer Inc. (PFE) $42.40 1.02%
Merck & Co. Inc. (MRK) $79.74 1.10%
International Business Machines Corp. (IBM) $138.03 1.14%
Visa Inc. (V) $144.80 1.22%
S&P 500 - Risers
Frontier Communications Co. (FTR) $2.65 11.81%
Diamond Offshore Drilling Inc. (DO) $10.35 7.81%
CenturyLink Inc. (CTL) $13.74 7.51%
American International Group Inc. (AIG) $42.30 5.30%
Range Resources Corp. (RRC) $10.88 4.72%
Transocean Ltd. (RIG) $8.94 4.57%
Southwestern Energy Co. (SWN) $4.19 4.49%
Chesapeake Energy Corp. (CHK) $2.61 4.38%
Devon Energy Corp. (DVN) $28.43 4.02%
EQT Corp. (EQT) $18.93 4.01%
S&P 500 - Fallers
Mattel Inc. (MAT) $13.82 -18.27%
Applied Materials Inc. (AMAT) $39.10 -3.95%
Hasbro Inc (HAS) $86.40 -3.73%
First Solar Inc. (FSLR) $49.18 -3.61%
Under Armour Inc. Class A (UAA) $21.16 -3.07%
American Airlines Group (AAL) $35.05 -2.94%
FedEx Corp. (FDX) $179.26 -2.51%
Deere & Co. (DE) $158.99 -2.11%
Activision Blizzard Inc. (ATVI) $44.60 -1.83%
CF Industries Holdings Inc. (CF) $41.77 -1.81%
Nasdaq 100 - Risers
Dish Network Corp. (DISH) $30.90 4.04%
Liberty Global plc Series C (LBTYK) $24.82 3.07%
Liberty Global plc Series A (LBTYA) $25.66 2.97%
Alexion Pharmaceuticals Inc. (ALXN) $129.42 2.77%
Illumina Inc. (ILMN) $299.81 2.51%
Biogen Inc (BIIB) $332.87 2.51%
Hologic Inc. (HOLX) $46.30 2.34%
Intuitive Surgical Inc. (ISRG) $548.50 2.32%
T-Mobile Us, Inc. (TMUS) $72.05 2.20%
Charter Communications Inc. (CHTR) $349.06 2.18%
Nasdaq 100 - Fallers
NetEase Inc. Ads (NTES) $227.62 -5.61%
Applied Materials Inc. (AMAT) $39.10 -3.95%
Hasbro Inc (HAS) $86.40 -3.73%
American Airlines Group (AAL) $35.05 -2.94%
Baidu Inc. (BIDU) $170.06 -2.31%
Activision Blizzard Inc. (ATVI) $44.60 -1.83%
JD.com, Inc. (JD) $23.96 -1.52%
Ctrip.Com International Ltd. Ads (CTRP) $33.32 -1.24%
Amazon.Com Inc. (AMZN) $1,607.95 -0.91%
Facebook Inc. (FB) $162.50 -0.88%
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