U.S. Stocks Extend Rally as China's Economy Stabilizes

Date : 01/17/2020 @ 8:52PM
Source : Dow Jones News

U.S. Stocks Extend Rally as China's Economy Stabilizes

By Will Horner and Gunjan Banerji 

U.S. stocks set repeated highs this week, pulled higher by shares of big technology companies.

The rally coincided with the signing of a trade deal between the U.S. and China that paused a long-simmering battle between two of the biggest world economies. Meanwhile, earnings from big banks showed that the domestic consumer remains strong, and fresh economic data released Friday also added to optimism about the U.S. economy.

Many investors for months had been preoccupied by the trade battle between the U.S. and China, worried that tensions between the two countries would weigh on economic growth. The deal this week eased some of that anxiety, while data on the U.S. consumer and housing encouraged investors that the long economic expansion could continue.

The S&P 500 rose 0.2% in recent trading, and the Nasdaq Composite drifted less than 0.1% higher. The Dow Jones Industrial Average rose less than 0.1% in recent trading. All three indexes are on track to close at records and notch weekly gains of at least 1.6%.

Big technology stocks have been among the biggest gainers of the week, rising 2.5% in the S&P 500.

"Just the general calm down about tariffs has been a big driver," said JJ Kinahan, chief market strategist at TD Ameritrade.

Data on consumer sentiment released Friday suggested that spending should remain robust in the near term. Meanwhile, fresh figures on housing showed that construction of new U.S. homes rose in December to the highest level since 2006.

State Street's stock gained 1% Friday as the trust bank's profit beat Wall Street's expectations. That report followed strong numbers earlier in the week from JPMorgan Chase and Morgan Stanley, among other banks.

Shares of Comcast jumped 0.7% toward a fresh high after it unveiled its new streaming platform. Investors will be analyzing more earnings results next week.

On Friday, signs of the Chinese economy stabilizing also fueled investors' optimism. New data showed China's industrial production rebounded last year, with the 6.9% growth in output in December beating forecasts and marking the fastest pace of expansion in nine months. Meanwhile, economic growth slowed to 6.1% last year, largely in line with market expectations. The Chinese yuan strengthened 0.3% against the dollar after the data, hitting its highest levels since July.

While it is too early to tell if the Chinese economic slowdown has bottomed out, the data added to investors' recent optimism about the prospects for the global economy following the partial resolution to the U.S.-China trade dispute, said Geoffrey Yu, head of the U.K. office for UBS Group's wealth management arm.

"It's a case of looking at it as a glass-half-full, rather than a glass-half-empty," Mr. Yu said. "There is a general sense that it could have been a lot worse."

Elsewhere, the pan-continental Stoxx Europe 600 gauge added 1%, also hitting a record.

In Asia, the Shanghai Composite Index ended the day largely flat. The economic data has prompted speculation that China's central bank may hold off on additional stimulus measures, said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.

Write to Will Horner at William.Horner@wsj.com and Gunjan Banerji at Gunjan.Banerji@wsj.com


(END) Dow Jones Newswires

January 17, 2020 15:37 ET (20:37 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.

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