All three major U.S. stock indexes hit new record highs on Friday, with the Dow up more than 220 points, breaking the 28,000-point milestone for the first time in history. The positive prospect of progress on the trade deal has boosted sentiment. Investors are also looking at a number of economic data, including U.S. retail sales. The Dow closed up 222.93 points, or 0.80 percent, at 2,8004.89, the S.P. 500 gained 23.83 points, or 0.77 percent, to 3,120.46 and the Nasdaq gained 61.81 points, or 0.73 percent, to 8,540.83.
For the first time in the history of the Dow, it was above the 28,000 mark. All three major indexes hit record intraday and closing highs, with the S.P. 500 recording its 21st-record closing high this year.
Stocks sensitive to changes in international trade, such as Caterpillar (CAT), Boeing (BA), Apple (AAPL) and Micron Technologies (MU), have generally climbed.
International trade relations remain the focus of market attention. Commerce Secretary Wilbur Ross and White House economic adviser Larry Kudlow’s positive speeches on the progress of the first phase of the trade deal sent sentiment soaring. Analysts noted that investors are still mulling over key news and speeches from key government officials about the progress of the trade deal.
Positive talk about the progress of the trade deal on Friday helped push up markets in the UK, continental Europe and most Asian markets.
The rebound in U.S. bond yields has allayed fears of a U.S. recession. The yield on the 10-year Treasury note rose 3.4 basis points to 1.846 percent on Friday. U.S. Treasury yields have rebounded from recent record lows hit just two months ago, in one of the clearest signs yet that investors’ recent fears of a recession have eased.
The rise in Treasury yields marks a major reversal in the bond market. Treasury yields have fallen so sharply this summer that some investors and analysts doubt it will fall below zero, one of the world’s trillion-dollar negative-yielding bonds.
Many investors expect the U.S. economy to grow at about 2% next year. While this is slower than last year’s 2.9 per cent growth rate, it is in line with recent long-term trends and far better than the contraction investors feared earlier this year.
In a recent congressional testimony, Federal Reserve Chairman Colin Powell reiterated that U.S. economic growth now looks sustainable and there is little sign of an immediate downturn.
On the economic front, U.S. retail sales data for October released by the Commerce Department showed that U.S. retail sales rose 0.3 percent month-on-month in October, with an expected 0.2 percent increase, compared with a decline of 0.3 percent.
After the October retail sales data, analysts noted that U.S. retail sales data for October were better than expected, driven by higher auto sales and gasoline prices. It’s worth noting, however, that U.S. consumers are buying down large items and clothing, which could lower market expectations for the holiday shopping season.
Another data showed that the US import price index fell 3 per cent year-on-year in October and is expected to fall by 2.2 per cent, revised from a 1.6 per cent decline to a 2.1 per cent decline. The U.S. import price index fell 0.5 percent month-on-month in October and is expected to fall 0.2 percent, revised from 0.2 percent to 0.1 percent.
The U.S. Federal Reserve’s manufacturing index for November was 2.9, up from 6, up from 4.
Manufacturing output fell 0.6 percent in October and 0.5 percent in September, according to Federal Reserve data released Friday. Excluding the impact of a 7.1 per cent fall in car production, the biggest drop since January, manufacturing output slowed to 0.1 per cent, in line with the previous month’s decline.
The data showed u.S. manufacturing output fell sharply in six months in October as general motors workers’ strikes affected car production and other manufacturers continued to come under pressure from trade frictions.
Markets are also watching the latest developments in public hearings on Trump’s impeachment in The U.S. Congress. Another witness at this week’s public hearing is former U.S. Ambassador to Ukraine Jovanovic, who will testify before Congress today.
Analysts say the impeachment provisions are likely to pass the Democratic-controlled House of Representatives, but are unlikely to pass the Senate.
Chip equipment maker Applied Materials (AMAT) reported a year-on-year decline in earnings after Thursday’s close, but beat Wall Street expectations. The company’s earnings outlook backs up reports that the chip industry is recovering.
NVDA, the chipmaker, expects revenue to return to growth, reversing a four-quarter decline. The company also reported better-than-expected quarterly results.
The furniture maker RH (RH) came under scrutiny after Warren Buffett’s Berkshire Hathaway (BRK.B, BRK.A) disclosed in regulatory filings that it had acquired 1.2 million shares in the former.
Berkshire Hathaway also disclosed that at the end of the third quarter, the company owned nearly 7.5 million SHAREs in OXY, worth about $332 million.
JD.com’s revenue rose 28.7 percent year-on-year to 134.8 billion yuan in the third quarter.
In Asia on Friday, the CSI 300 index closed down 0.7 per cent, the Shanghai Composite Index closed down 0.6 per cent and Hong Kong’s Hang Seng index closed virtually flat. Japan’s Nikkei 225 closed 0.7 percent higher.
In Europe, Britain’s FTSE 100 closed up 0.04 per cent, Germany’s DAX gained 0.36 per cent, France’s CAC gained 0.59 per cent and Spain’s IBEX closed up 0.86 per cent.
Gold futures for December delivery fell $4.90, or 0.3 percent, to $1,468.50 an ounce on friday. Gold futures rose about 0.4 per cent this week on the most active basis.
Silver fell 8 cents, or 0.5 percent, to $16.948 an ounce. Silver futures are up about 0.7 percent this week.
West Texas Intermediate for December delivery rose 95 cents, or 1.7 percent, to $57.72 a barrel on the New York Mercantile Exchange. WTI futures are up 0.8 percent this week.
Brent crude for January delivery rose $1.02, or 1.6 percent, to $63.30 a barrel on the London-based Intercontinental Exchange. Brent crude futures are up 1.3 percent this week.