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