Stocks rose on Friday amid renewed optimism about the progress of trade talks between Washington and Beijing as Wall Street ended an excellent quarterly performance. The Dow Jones industrial average rose 157 points, with Boeing and Caterpillar gaining the most. The Standard & Poor’s 500 Index rose 0.4%, led by the industrials and health care sectors. The Nasdaq rose 0.6%.
CarMax was the best performer in the Standard & Poor’s 500 index, rising 10.6% on strong earnings. Morale was also boosted by Lyft as the company’s shares rose more than 12% on the first day of trading.
US officials said China has made proposals on a range of issues that have gone beyond what it was before, including the forced technology transfer. Treasury Secretary Stephen Mnuchin also said on Friday it was a “productive working dinner” with Chinese trade officials the night before in Beijing, where the two sides resumed negotiations in the hope of ending the long-running trade dispute.
The world’s two largest economies-imposed tariffs of billions of dollars on goods over the past year, destroying financial markets and affecting corporate and consumer sentiment.
According to US market analysts, there is still some bullish market trend going on. The markets are currently facing a lack of conviction regarding any positive results, because there are so many factors to consider. However, markets will mot probably see a short-term bump.
Chinese stocks rose overnight. The Shanghai Composite Index rose 3.2% overnight to lead the region’s stock indexes. In the United States, Caterpillar and Boeing were up more than 1%. Friday’s gains were added to the strong performance of the quarter. The Standard & Poor’s 500 Index rose 12.3% during the period, posting its biggest quarterly gain since the third quarter of 2009. The overall index has been on track for its best quarter since 1998.
The Dow rose 10.3% this quarter to Thursday’s close with the best start of a year since 2013, while the Nasdaq is on a steady pace to achieve the biggest quarterly gain since the first quarter of 2012.
This quarter’s rebound is characterized by a few key factors: a sharp rebound from Christmas Eve lows, increased optimism in US-China trade talks and an important reversal in the Fed’s monetary policy stance.
Concerns about a possible economic slowdown have raised some doubts on the rise as global economic data continue to deteriorate. This has led to lower bond yields worldwide. Recently, 10-year Treasury yields hit their lowest level since December 2017 and are less than their 3-month counterparts for the first time since 2007. This is known as the reversal of the yield curve and investors see it as a sign of a possible recession.
Atlanta’s GDPNow forecast an economic growth of 1.5% for the first quarter, well below the 2.2% rate for the fourth quarter of 2018. Profit growth in the first quarter is also expected to be weak. FactSet data shows that analysts expect the S & P 500’s earnings to fall in the first quarter by 3.7% YoY. However, earnings data show that analysts expect earnings growth to rise in the last quarters of the year.
The bottom line is that if we can get to the end of the year and say that inflation is benign and that the Fed is still in a critical position, then we can say pretty surely that there will be no recession soon. By August this will be the longest economic cycle in history and will last longer than many people think.
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