UNH UnitedHealth Group Inc

By Gunjan Banerji 

The Dow Jones Industrial Average crossed 28000 for the first time Friday, notching a new record as fading recession fears extended the decadelong bull-market rally.

A furious rise in the final minutes of the trading session thrust the Dow above its latest milestone, re-energizing a stock market that appeared listless in recent days.

Investors drove the Dow up 222.93 points, or 0.8%, to 28004.89 -- its 11th record close of 2019 -- as they cheered trade developments and a rosier economic outlook. The blue-chip gauge has logged four straight weeks of gains.

The S&P 500 and technology-heavy Nasdaq Composite also closed at records, extending their weekly winning streaks to six and seven, respectively.

This week's optimism was spurred, in part, by White House economic adviser Lawrence Kudlow who indicated progress toward a potential trade deal with China and Federal Reserve Chairman Jerome Powell who noted strength in the economy. A better-than-feared corporate earnings season has also helped fend off fears of a downturn that had weighed on markets in recent months.

Meanwhile, fresh data Friday showed U.S. retail sales rebounded in October, rising 0.3% after a drop the previous month. Those figures bolstered confidence in the U.S. consumer, a key engine of domestic growth, and followed a strong earnings report from Walmart. The retail giant on Thursday reported another increase in sales, marking a five-year streak of quarterly sales gains.

Those developments reignited investor enthusiasm about the final stretch of 2019, particularly in light of the Federal Reserve's three interest-rate cuts this year. Many investors had previously been wary of a redo of 2018, when an autumn selloff erased a rally that had been months in the making.

Now, many predict the recent rally to continue.

"Ever so slowly...you get increasing confirmation that this slowdown has stabilized," said Joseph Amato, chief investment officer at Neuberger Berman. "All these things have come together to build a little bit more confidence in risk assets."

The Dow's climb above 28000 marked its first thousand-point milestone since July. Much of those gains -- 434 points -- were powered by Apple whose shares have advanced 32% since mid-July. That was followed by Microsoft, which added 78 points.

In Friday's session, the biggest winners were shares of health-care companies including UnitedHealth Group and Pfizer. A far-reaching plan released by the Trump administration showed that hospitals and insurers would be forced to disclose secret, negotiated rates for the first time.

The S&P 500 finished the week 0.9% higher. Its six consecutive weeks of gains are the longest such stretch in two years. The Nasdaq Composite advanced 0.8% this week.

Strong retail earnings like those from Walmart have spurred optimism that a strong holiday season could be ahead. Shares of J.C. Penney rose 6.4% Friday after the retailer boosted its financial outlook for the year and reported better-than-expected third-quarter results.

Investors have also been encouraged by a rebound in government-bond yields, particularly in the U.S. The growing positive gap between 10-year yields and two-year yields has helped ease fears about a potential recession.

"Much of this rally over the past 30 days is the reassessment of the recession risk that was increasingly priced into the market," said Bob Browne, chief investment officer of Northern Trust Corp. "We would expect this momentum to continue going into the end of the year."

The string of records for stocks comes as broader markets have been in a lull. In one sign of how sleepy trading has been, the Dow finished unchanged earlier this week for only the third time since 2000.

The S&P 500, meanwhile, hadn't moved up or down more than 0.5% for nine consecutive trading days through Thursday, the longest streak since October 2018, according to Dow Jones Market Data.

This is partially driven by mixed signals of progress between the U.S. and China that have left investors in a lurch, analysts said.

"I think the uncertainty is still elevated," said Justin Onuekwusi, head of retail multiasset funds at Legal & General Investment Management. "Just because you see an improvement doesn't mean it's gone away," he said.

Though stock investors appeared elated, caution was evident in traditionally safer investments this week, as investors also scooped up haven assets like Treasurys and gold. The yield on the 10-year Treasury note fell to 1.833%, its biggest one-week yield decline in a month. Gold prices edged higher.

Some analysts said big risks have receded lately, rather than positive news emerging to help drive stocks higher.

For example, though retail sales didn't disappoint, the data stood in contrast to U.S. factory production, which fell in October. Mr. Powell told lawmakers Thursday that the U.S.-China trade conflict has weighed on domestic manufacturing activity.

Elsewhere, Hong Kong's Hang Seng Index was flat Friday but ended the week down 4.8%, its worst week since early August, after antigovernment protests in the Chinese territory turned more violent with some of the worst clashes in six months of unrest. The Shanghai Composite Index ended the week down 2.5%.

Paul J. Davies and Caitlin Ostroff contributed to this article.

Write to Gunjan Banerji at Gunjan.Banerji@wsj.com

(END) Dow Jones Newswires

November 15, 2019 17:41 ET (22:41 GMT)

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