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By Karen Langley and Caitlin Ostroff 

U.S. stocks closed at fresh highs Thursday as investors shifted to examining corporate earnings for hints about the economy after an initial U.S.-China trade deal was sealed.

The Dow Jones Industrial Average added 267.42 points, or 0.9%, to 29297.64, a day after finishing above 29000 for the first time. The S&P 500 climbed 27.52 points, or 0.8%, to 3316.81 and the technology-heavy Nasdaq Composite advanced 98.44 points, or 1.1%, to 9357.13.

The trading session delivered a reminder of the extent to which large tech companies have powered the U.S. stock market as of late: Advances in shares of Google parent Alphabet made it the fourth U.S. company ever to achieve a $1 trillion market value. Class A shares rose $10.96, or 0.8%, to $1,450.16.

The first week of the U.S. corporate earnings season continued with results from Morgan Stanley, which reported stronger-than-expected profits and revenue. Shares of the investment bank rose $3.50, or 6.6%, to $56.44.

The robust results reported by some of America's biggest banks are a positive sign for the markets, said Tom Stringfellow, president and chief investment officer at Frost Investment Advisors.

"It can be a barometer of economic stabilization," he said.

Investors also parsed new data, including figures showing U.S. retail sales rose at a steady pace in December to close the holiday shopping season. Consumer spending is a key driver of U.S. economic growth.

Other data Thursday showed the number of Americans applying for first-time unemployment benefits fell last week, remaining at historically low levels.

The gains in stocks were steady throughout the day, with investors showing little reaction as the impeachment trial of President Trump opened midday in the U.S. Senate.

Following the signing of the phase-one trade deal, investors will be looking for a recovery in corporate earnings in future quarters, said Christopher Iggo, chief investment officer for core investments at AXA Investment Management.

"We're trading at quite rich valuations," Mr. Iggo said. "You need those earnings to come through to justify the current valuations."

Companies in the S&P 500 are expected to report a 2.3% decline in earnings in the fourth quarter from a year earlier, according to FactSet estimates. But analysts are expecting earnings growth to pick up in the first quarter of 2020.

In other earnings news, shares of paint maker PPG Industries fell $3.33, or 2.5%, to $127.41 after it warned of uncertain conditions for 2020 and missed profit expectations. Shares of Alcoa dropped $2.40, or 12%, to $17.78 after the aluminum maker reported a steeper-than-expected loss.

Signet Jewelers shares surged $8.64, or 40% -- its largest percentage increase since Nov. 5, 1992 -- to $30.13, after the diamond jewelry retailer said that holiday sales rose and raised its fourth-quarter guidance.

Overall, the gains among stocks were broad-based, with all 11 sectors of the S&P 500 rising, led by technology shares. Semiconductor companies, which have been sensitive to trade developments, did particularly well, with shares of Micron Technology rising $1.51, or 2.7%, to $57.68.

The signing of the China trade deal Wednesday brought a cease-fire to a two-year trade war that captivated markets and dented global growth, though it leaves in place U.S. tariffs on about three-quarters of Chinese imports to the U.S. Potential reductions in tariffs were left for later negotiations.

"Over the past year, the uncertainty and the concern over what was going on between the U.S. and China was driving headlines that were absolutely coming into the markets," said Terri Spath, chief investment officer at Sierra Investment Management. "The fact that there's productive motions forward, and that is now confirmed, is certainly taking away that risk that was weighing on the market."

The deal is likely to boost growth in 2020 and spur an increase in business investment, according to economists surveyed by The Wall Street Journal.

Overseas, the Stoxx Europe 600 rose 0.2% to close at a record. China's Shanghai Composite Index ended the day down 0.5%.

The yield on the benchmark 10-year U.S. Treasury was 1.809%, up from 1.788% Wednesday.

Write to Karen Langley at karen.langley@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com

(END) Dow Jones Newswires

January 16, 2020 17:01 ET (22:01 GMT)

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