The S&P 500 (^GSPC) rose 0.4%, or 11.01 points, as of 1:06 p.m. ET. The Dow (^DJI) rose 0.26%, or 68.13 points, to 25,984.13. Earlier in the session, the index rose more than 200 points, but it would need to hold above 26,031.81 points total by the end of the session to clinch a tenth consecutive week of advances. The Nasdaq (^IXIC) rose 0.54%, or 41.03 points.
Growth in China, one of the world’s largest economies, has been a central focus for investors over the past several months amid an ongoing trade war and signs that its economy was slowing. But signs Friday pointed to improving conditions, helping stymie fears after reports in January pointed to the slowest gross domestic product growth in nearly three decades in China.
The private Caixin/Markit Manufacturing Purchasing Managers’ Index registered at 49.9 for February, better than January’s 48.3 reading and consensus estimates of 48.5. The reading, however, showed manufacturing activity still in the contractionary territory of below 50 for the third consecutive month.
The global index provider MSCI said Thursday that it will boost the weight of Chinese stocks to an inclusion factor 20% from 5% previously. The rationale behind the decision, which MSCI asserted “garnered overwhelming support from investors,” pointed to improving market conditions and international openness in mainland China.
“The strong commitment by the Chinese regulators to continue to improve market accessibility, evidenced by, among other things, the significant reduction in trading suspensions in recent months, is another critical factor that has won the support of international institutional investors,” MSCI managing director Remy Briand said in a statement.
This comes amid an ongoing effort for the U.S. and China to a reach a deal on trade. U.S. officials have offered mostly positive signals for the progress of the talks in recent days, with National Economic Council Director Larry Kudlow and Treasury Secretary Steven Mnuchin extolling advancements in the talks earlier this week. U.S. Trade Representative Robert Lighthizer indicated in a testimony to Congress Wednesday that work to change structural issues in China would require ongoing negotiations even after a signed deal.
U.S. equities have been on a tear in 2019 amid trade optimism and alleviated concerns for tightening monetary policy from the Federal Reserve. The S&P 500 is up 11% for the year-to-date through Friday, and has closed lower just 13 sessions in 2019.
Grocery store stocks declined following a Wall Street Journal report that Amazon will be launching its own grocery-store business separate from Whole Foods. The report, citing unnamed people familiar with the matter, said that the company plans to open an initial grocery store in Los Angeles as soon as the end of the year. Shares of Walmart (WMT) declined 1.25%, while Kroger (KR) fell 4.19%, as of 12:44 p.m. ET.
Tesla (TSLA) shares declined after the company announced Thursday that it will be closing many of its stores – “with a small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centers” – and shifting sales online in order to remain profitable as it rolled out a long-promised $35,000 standard Model 3. CEO Elon Musk also said during a media call Thursday that he does not expect Tesla to be profitable in the first quarter of 2019.
Gap (GAP) said Thursday that it will be splitting into two publicly traded companies sometime in 2020, including Old Navy and another as-yet-unnamed corporation. “Following a comprehensive review by the Gap Inc. Board of Directors, it’s clear that Old Navy’s business model and customers have increasingly diverged from our specialty brands over time, and each company now requires a different strategy to thrive moving forward,” Gap Chairman Robert Fisher said in a statement. Old Navy currently operates more than 1,100 stores in its largest market of North America and Asia, and brought in $7.8 billion in sales last year, up from $7.3 billion in 2017.
Dell (DELL) topped Wall Street expectations for sales in its first quarterly report following its return to the public markets in December. Revenue for the fiscal fourth quarter was $24 billion on a non-GAAP basis, exceeding estimates of $23.83 billion. The company’s guidance for full-year 2020 revenue between $92.7 billion and $95.7 billion was roughly in-line with consensus estimates for $94.77 billion, according to Bloomberg data, although its guidance for adjusted earnings per share of between $6.05 and $6.70 were short of estimates of $6.74 cents.
Personal income unexpectedly decreased in January after rising more-than-expected in December, the Bureau of Economic Analysis reported Friday. December personal income, released on delay due to the partial government shutdown, was up 1% in December, ahead of an anticipated 0.4% rise, according to economists polled by Bloomberg. The BEA said in a statement that the increase in personal income in December “primarily reflected increases in personal dividend income, compensation of employees and farm proprietors’ income.” However, in January, nominal income edged lower by 0.1%, below the 0.3% increased analysts had expected.
Personal spending decreased more-than-expected in December, with nominal consumption down 0.5% versus a 0.3% anticipated decline, according to consensus economists. The decrease in spending came in tandem with very weak December retail sales data, with retail spending down the most since September 2009 for the final month of 2018.
Core personal consumption expenditure prices, which exclude volatile food and energy prices, were up 0.2% month-over-month in December, in-line with consensus expectations and the previous month’s upwardly revised reading. The year-over-year change in core PCE was 1.9%, also matching consensus expectations.
The SPDR S&P 500 ETF Trust (SPY) was trading at $279.79 per share on Friday afternoon, up $1.11 (+0.40%). Year-to-date, SPY has gained 5.27%.
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