By Chris Matthews and Barbara Kollmeyer, MarketWatch
Negotiators hope to draft a 'memorandum of understanding'
Stocks traded near intraday highs Friday morning, as investors
focused on continued progress in trade negotiations between China
and the U.S. in the final day of its weeklong round of discussions.
Reports that talks are set to be continued next week in Washington
added fresh hope that a resolution was near, even if key the
parties appeared far apart on some key points.
Stock markets are set to be closed on Monday, Feb. 18, in
observance of the Presidents Day holiday.
How are major benchmarks faring?
The Dow Jones Industrial Average rose 337 points, or 1.3%, to
25,776, while the S&P 500 index was up 25 points, or 0.9%, to
2,770. The Nasdaq Composite Index climbed 38 points, or 0.5%, to
7,465.
For the week, the Dow was on pace for a 2.5% rise, the S&P a
2.3% advance, while the Nasdaq was set to gain 2.2%.
What's driving the market?
U.S.-China trade talks wrapped up Friday in Beijing, with
reports negotiators remained deadlocked over key issues
(http://www.marketwatch.com/story/china-hopes-vow-to-buy-more-us-goods-including-semiconductors-can-help-end-trade-war-2019-02-14),
but were set to extend their discussions in to next week in
Washington -- viewed as a sign that both sides were eager to reach
a deal ahead of March deadline.
In a statement issued Friday morning, the White House described
the discussions as "detailed and intensive," which led to "progress
between the two parties."
"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 [to 25%] on certain imported Chinese goods," the
statement said.
The U.S. negotiating team met with Chinese President Xi Jinping
on Friday and those discussions were said to be upbeat. China is
reportedly hoping that purchases of U.S. semiconductor and other
goods will ease tensions and persuade Trump to extend a tariff
truce which ends on March 1. A big chunk of gains for stocks this
week has been credited to optimism over the talks.
Xi hailed the talks
(https://www.wsj.com/articles/chinese-u-s-negotiators-expected-to-show-progress-on-trade-deal-framework-11550212318?mod=hp_lead_pos2)
as having achieved "important interim progress," according to
China's official Xinhua News Agency, while encouraging U.S. and
Chinese negotiators to "continue to work hard" during talks
scheduled to take place in Washington next week.
Meanwhile, U.S. political tensions were swinging back into focus
for investors. Senate Majority Leader Mitch McConnell said late
Thursday that Trump will sign a spending bill to keep the
government open, but also declare a national emergency at the
border
(http://www.marketwatch.com/story/trump-will-sign-spending-bill-and-declare-emergency-over-border-mcconnell-says-2019-02-14)
to get wall funding, which may set him up for a showdown with
Congress.
Without passage of the agreement by Congress and a signature by
Trump, parts of the government would shut down early Saturday
morning. House speaker Nancy Pelosi said she may file a lawsuit
challenging the president's plan to declare a state of
emergency.
The president was expected to hold a conference to discuss
border security late-morning Friday in a news conference in the
Rose Garden.
Read: If Trump declares an emergency, here's where the money to
build a border wall might come from
(http://www.marketwatch.com/story/if-trump-declares-an-emergency-heres-where-the-money-to-build-a-border-wall-might-come-from-2019-02-14)
What data are in focus?
The cost of imported goods fell in January for the third
straight month, down 0.5% from December, led by lower oil
prices.
The Empire State manufacturing index, which gauges the health of
the New York State manufacturing sector rose 4.9 points in February
to 8.8, above economists expectations of 7.6, according to a survey
by Econoday.
U.S. industrial production fell in January for the first time in
eight months, the Federal Reserve said Friday
(http://www.marketwatch.com/story/us-industrial-production-slumps-in-january-2019-02-15).
The University of Michigan's consumer-sentiment index for
February The preliminary University of Michigan consumer sentiment
index for February rebounded, with the index rising to 95.5 from
91.2 in January, which was the worst since Nov. 2016. Economists
polled by MarketWatch expected a 94 reading.
Investors have been focused on data after U.S. retail sales on
Thursday showed a fall by 1.2% in December
(http://www.marketwatch.com/story/retail-sales-sink-12-in-december-to-mark-biggest-drop-since-2009-as-holiday-season-fizzles-out-2019-02-14),
the largest single-month decline since 2009.
What are the analysts saying?
"Trade has been the biggest weight on markets of late, and so
it's good to see both sides talking up progress," Chris Gaffney,
president of world markets at TIAA Bank told MarketWatch.
He also pointed statements made Thursday by Fed Gov. Lael
Brainard
(http://www.marketwatch.com/story/feds-brainard-says-retail-sales-report-is-a-reminder-of-downside-risks-facing-economy-2019-02-14),
when she argued that the Fed should end its program of
balance-sheet reduction 'later this year,' as another reason for
optimism in stock markets Friday. "Changing investor views on what
the ultimate balance sheet will look like is especially positive
for equity markets," he said.
"A significant shift in sentiment occurred on Friday morning
following the latest trade talks update," wrote Connor Campbell, an
analyst at Spreadex in a note. "After a few days of discussion in
Beijing, President Xi Jinping has said that the talks will continue
in Washington next week, both sides still chasing that elusive deal
before the ceasefire ceases at the start of March," he said.
"This faint whiff of progress was enough to cause the markets to
reverse the losses that had come after the double-hit of Donald
Trump's 'national emergency' chat and China's inflation-slowdown,"
Campbell wrote.
What stocks are in focus?
Shares of Newell Brands Inc. (NWL) were falling nearly 17%
Friday morning, after the consumer-products company beat
fourth-quarter earning and revenue expectations, but offered a
downbeat outlook for 2019.
PepsiCo Inc. (PEP) stock was in focus Friday, after the firm
issued fourth-quarter earnings and revenue that was in line with
expectations. The stock is up 2% Friday morning.
Deere & Co. (DE) shares were falling 0.4%, after the
agricultural-equipment manufacturer fell short of earnings
estimates for its fiscal first-quarter, though it beat sales
expectations.
Shares of Arista Networks Inc. (ANET) were rallying 7.9% Friday,
after the cloud-computing company beat fourth-quarter expectations
and provided an upbeat guidance for first-quarter sales, in a
Thursday evening report
(http://www.marketwatch.com/story/arista-networks-stock-gains-5-after-q4-earnings-top-views-2019-02-14).
Nvidia Corp. (NVDA) stock was also on the rise, up 4.5%, after
the chipmaker issued fourth-quarter performance and 2019 outlook
that was better than analysts had feared
(http://www.marketwatch.com/story/nvidia-stock-bounces-back-after-clearing-lowered-earnings-bar-2019-02-14).
How did the major benchmarks fare yesterday?
On Thursday
(http://www.marketwatch.com/story/sp-500-nasdaq-poised-to-extend-rally-to-a-fifth-day-on-us-china-trade-talk-progress-2019-02-14),
the Dow fell 103.88 points, or 0.4%, to 25,439.39, while the
S&P 500 index shed 7.30 points, or 0.3%, to 2,745.73. The
Nasdaq Composite Index edged up 6.58 points to 7,426.95.
How are other markets trading?
Asian stocks closed lower
(http://www.marketwatch.com/story/asian-markets-fall-as-uncertainty-grows-2019-02-15),
with Hong Kong's Hang Seng Index tumbling nearly 2%. In Europe,
stocks were rallying, with he Stoxx Europe 600 up 0.8%
Crude-oil futures were inching up, along with gold and the U.S.
dollar
(END) Dow Jones Newswires
February 15, 2019 10:35 ET (15:35 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.