Each of the S&P 500, Dow and Nasdaq closed at record highs, ending the week on a high note after a senior Trump administration official said a trade deal with China was nearing and domestic economic data mostly topped expectations.
The Dow cleared 28,000 points for the first time ever, led by gains in shares of UnitedHealth (UNH) and Johnson & Johnson (JNJ) as the health-care sector as whole surged. The 30-stock index was higher on the week for a fourth consecutive week.
Here’s where the markets settled Friday:
S&P 500 (^GSPC): +0.77%, or 23.73 points
Dow (^DJI): +0.8%, or 222.18 points
Nasdaq (^IXIC): +0.73%, or 61.81 points
10-year Treasury yield (^TNX): +1.9 bps to 1.834%
Gold (GC=F): -0.43% to $1,467.00 per ounce
The Dow reaching the “psychologically important 28,000 level is yet another sign that investors are regaining confidence in the pending trade truce with China” and are continuing with “confidence in a U.S. economy that is growing at a stable pace,” Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, wrote in an email to Yahoo Finance.
“In absence of any major, negative news on trade, the market is poised to begin the Santa Claus rally early and should leave markets even higher by year end,” he added.
White House economic adviser Larry Kudlow told reporters after an event late Thursday in Washington that a trade deal with China was close but “not done yet,” according to a Bloomberg report on his remarks. But Kudlow added that deliberations were “coming down to the short strokes,” and that the two sides have been in communication every day.
Conflicting messages over progress in a trade deal have sent tremors through markets this week, although stocks have so far pushed through these jitters to fresh record highs. Earlier in the week, multiple reports suggested talks between the U.S. and China had snagged on debates over the size of China’s annual U.S. farm goods purchases, and whether the U.S. would roll back its punitive tariffs on Chinese imports.
Elsewhere, continued unrest in Hong Kong, as protestors blanket the region in increasingly violent demonstrations, has led to downward revisions for economic growth. Hong Kong now expects to see gross domestic product contract by 1.3% in 2019 over last year, the government said Friday. In the three months ended September, GDP contracted by 3.2% on a quarterly basis.
The protests spurred a rare public response from Chinese President Xi Jinping, who backed support for Hong Kong’s police force and condemned the pro-democracy protestors. Beijing will “firmly support the Hong Kong judicial bodies in severely punishing the violent criminals in accordance with the law,” he said in remarks Thursday, according to China’s state-run news agency Xinhua.
The surge in violence led members of the U.S. Senate on Thursday to tee up an expedited process to pass legislation that would support pro-democracy protestors, with a bill potentially able to pass as soon as next week. The legislation would require that the State Department determine at least once per year that the region – a major global financial hub – retained enough autonomy from China to justify its special trade status with the U.S. A related bill passed the House of Representatives last month.
EARNINGS: Nvidia posts strong 3Q results but weak guidance, J.C. Penney raises outlook
Nvidia (NVDA) delivered better than expected third-quarter results after market close Thursday, with a year-over-year sales decline coming in less steeply than anticipated as demand for the company’s flagship gaming chips improved. Third-quarter adjusted earnings were $1.78 per share on revenue of $3.01 billion, topping expectations for $1.55 a share on revenue of $2.91 billion.
For the current quarter, Nvidia sees revenue of $2.95 billion, plus or minus 2%. Even at the high end, this fell short of consensus expectations for $3.07 billion in sales. Nevertheless, the company said it is anticipating “strong sequential growth” in its data center chip business, even as its graphic gaming chips and components tend to see seasonal weakness in its fiscal fourth quarter.
J.C. Penney (JCP) posted a narrower than expected adjusted loss and lower inventory in its fiscal third quarter, sending shares up by 11% even as sales contracted again. The company reported results before market open Friday.
Closely watched comparable same-store sales declined 9.3% over last year, or worse than the 8.3% decline expected. However, adjusted losses were just 30 cents a share, narrowing over last year and compared to the 56-cent loss per share expected. Inventory declined 9% over last year, indicating the company is moving through its backlog of products.
J.C. Penney said it expects its adjusted EBITDA will top $475 million this year, after previously forecasting this would come in between $440 million to $475 million. CEO Jill Soltau said in a statement that the company’s turnaround plan had begun generating results, “both in our numbers and how we operate as a business.”
So far, companies comprising about 94% of the S&P 500’s market capitalization have reported third-quarter results. Earnings have beaten by 4.4%, with 69% of companies surpassing their bottom-line estimates, according to an analysis by Credit Suisse equity strategist Jonathan Golub. This, however, is below the average of the past three years, during which earnings beat by 5.4% and 71% of companies exceeded their profit estimates, Golub added.
ECONOMY: Retail sales recover in October
Retail sales rose more than expected in October, rebounding from a September slump.
Headline advance retail sales rose 0.3% month-over-month, the Commerce Department said Friday. This was above the 0.2% gain expected, according to Bloomberg-compiled consensus data, and September’s unrevised 0.3% decline. The increase was led by gas sales, which rose 1.1%, and nonstore retailers – or e-commerce platforms – which saw a sales increase of 0.9% for the month.
Clothing stores saw a steep 1% drop in retail sales in October. Furniture and home furnishing stores, as well electronics and appliance stores, also saw sales declines for the month.
Excluding more volatile auto and gas sales, however, retail sales increased by only 0.1% in October, short of the 0.3% gain expected. September’s retail sales change was downwardly revised to a 0.1% decline, from a flat reading previously.
Excluding auto, gas, building materials and food services, retail sales rose 0.3% in October, after a downwardly revised 0.1% decline in September. This so-called core measure of retail sales most closely aligns with the consumer spending portion of gross domestic product.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
Read more from Emily: