Stocks Surge on U.S.-China Trade Optimism; Dow Notches Eighth Consecutive Weekly Gain
Stocks surged on Friday, with the Dow hitting its highest in over three months as investors embraced apparent progress in U.S.-China trade negotiations. Meanwhile, President Trump declared a national emergency over border-security funding mere hours after Congress approved a new budget resolution preventing a second costly government shutdown.
Dow Extends Winning Streak to Eight Weeks
All three of Wall Street’s benchmarks headed for gains on the final day of the week. The Dow Jones Industrial Average spiked 443.86 points, or 1.7%, to close at 25,882.25. That was the Dow’s highest settlement since Nov. 9.
Financial bellwethers Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co (JPM) were the Dow’s biggest gainers on Friday.
The broad S&P 500 Index advanced 1.1% to settle at 2,775.60. All 11 primary sectors finished higher and five reported gains of at least 1.1%. Financials were the biggest contributors to the rally, climbing 1.9% as a group. Energy stocks rose 1.4% and health care added 1.3%.
The technology-focused Nasdaq Composite Index added 0.6% to finish at 7,472.41.
A measure of expected volatility over the next 30 days fell on Friday to its lowest level since early October. The CBOE Volatility Index, also known as the VIX, reached a session low of 14.79 on a scale of 1-100 where 20-25 represents the historical average. Volatility usually drops when stocks rise.
U.S.-China Trade Talks See Progress
The White House on Friday touted progress in the ongoing trade negotiations between the United States and China after both sides concluded two days of meaningful dialogue.
In an official press release, the White House described the negotiations as “detailed and intensive,” which led to “progress between the two parties.” The statement added: “Both sides will continue working on all outstanding issues in advance of the March 1, 2019, deadline for an increase in the 10 percent tariff on certain imported Chinese goods.”
China next week will send its trade envoy to Washington to resume the negotiations. While both sides have until Mar. 1 to get a deal finalized, President Trump has said he will let the deadline “slide” if the two countries make progress.
Trump Declares National Emergency
President Trump has declared a national emergency to unlock additional funds for his proposed 234-mile border wall with Mexico. The declaration ignited a new debate over the legality of increased border spending even though “national emergencies” are hardly novel among presidents.
Check out the week that was in our Week in Review: Jamie Dimon Gets Crypto Fever as JPMorgan Develops Stablecoin; Bitcoin Fundamental Improve.
On Thursday, both houses of Congress passed $333 billion in new spending legislation. The budget allotted just $1.38 billion towards the border, which is well short of the $5.7-billion Trump had requested. Under the current budget blueprint, the United States would have enough funds to erect an additional 55 miles of barrier.
In a speech at the Rose Garden, Trump said a fortified border was essential to national security. “We’re talking about an invasion of our country,” he said, according to The Wall Street Journal.
Featured image courtesy of Shutterstock. Chart via Barchart.com.