AP

Stocks Post Gains On Solid Earnings, US-China Trade Optimism

Oct 25, 2019, 3:47 PM | Updated: Jun 8, 2022, 5:00 pm
FILE - In this Oct. 2, 2019, file photo specialists James Denaro, left, and Mario Picone work on th...
FILE - In this Oct. 2, 2019, file photo specialists James Denaro, left, and Mario Picone work on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EDT on Friday, Oct. 25. (AP Photo/Richard Drew, File)
(AP Photo/Richard Drew, File)

The S&P 500 closed just short of an all-time high Friday as investors welcomed solid company earnings reports and an encouraging update on trade talks between the U.S. and China.

Technology, communications services and financial stocks powered the rally. The index ended within 0.1% of its record set July 26. It also notched its third straight weekly gain.

Strong earnings reports from Intel, Charter Communications and other companies helped reverse a mixed start.

The buying accelerated around midday after the U.S. Trade Representative’s office said the discussions with China’s negotiating team “made headway and the two sides are close to finalizing some sections of the agreement.”

“You’ve had indexes around the world make new highs since the last time the S&P did,” said Willie Delwiche, investment strategist at Baird. “If we want to see a new high that’s going to be durable we need to see more U.S. broad market improvement. It’s heading in that direction, but it’s not there yet.”

The S&P 500 rose 12.26 points, or 0.4%, to 3,022.55.

The Dow Jones Industrial Average gained 152.53 points, or 0.6%, to 26,958.06. The Nasdaq climbed 57.32 points, or 0.7%, or 8,243.12. The Russell 2000 index of smaller stocks picked up 8.53 points, or 0.6%, to 1,558.71.

The U.S.-China trade conflict, which has led both sides to impose billions in tariffs on each other’s goods, has roiled financial markets and stoked worries that the dispute could tip the global economy into a recession.

Those worries eased in recent weeks, after Washington and Beijing worked to calm tensions and then resumed negotiations.

That’s allowed investors to focus on company earnings reports the past two weeks. Traders want to get a sense of how Corporate America is faring against the backdrop of the costly trade war between the world’s two biggest economies.

Earnings reports so far have mostly exceeded Wall Street analysts’ modest expectations. However, many of those that delivered improved results for the quarter have also issued disappointing profit outlooks.

Of the roughly 40% of the companies in the S&P 500 that have reported so far, 80% of them had results that topped Wall Street’s earnings forecasts, while 64% beat revenue estimates, according to FactSet.

Factoring in the earnings reports that have already come in, analysts expect earnings from S&P 500 companies for the July-September quarter will be down 3.7% from a year ago. That’s slightly better than the 4% drop that analysts were initially expecting.

As of Friday, some 38 companies in the S&P 500 had issued earnings forecasts for the fourth quarter. Of those, 26 issued negative guidance and 12 gave a positive outlook. That works out to 68% of those companies lowering their guidance, which is just below the 5-year average of 70%, according to FactSet.

Until this week, the market had a mostly muted reaction to earnings. In contrast, the S&P 500 notched gains four out of the past five days, rounding out the week with a three-day winning streak.

Intel jumped 8.1% after raising its profit forecast for the year following a solid third quarter. Fellow chipmakers, including Nvidia, also made strong gains.

Charter Communications gained 6.2% after reporting solid financial results. The cable operator made some of the strongest gains among its fellow communications companies.

Banks rose as bond yields moved higher. The yield on the 10-year Treasury rose to 1.8% from 1.76% late Thursday.

Consumer product makers, utilities and real estate companies lagged the market.

Amazon fell 1.1% after releasing disappointing third-quarter profits and a weak sales forecast for the holiday shopping season.

Some of the biggest names in technology and industry will release their results next week: Alphabet, Google’s parent company, on Monday; General Motors, and drugmakers Merck and Pfizer on Tuesday; Apple and Facebook on Wednesday; and, Exxon on Friday.

Beyond earnings, the Federal Reserve issues its latest interest rate policy statement Wednesday afternoon, while the government will release its latest monthly tally of hiring and consumer confidence.

The economic data, along with a steady flow of important corporate earnings reports, could inject more volatility into the markets.

“The big focus will be the Fed,” Delwiche said. “They’re likely to cut rates. If they didn’t that would come as a surprise. The uncertainty is what sort of guidance they give going forward.”

Benchmark crude oil rose 43 cents to settle at $56.66 a barrel. Brent crude oil, the international standard, gained 35 cents to close at $62.02 a barrel. Wholesale gasoline rose 1 cent to $1.67 per gallon. Heating oil fell 1 cent to $1.98 per gallon. Natural gas slid 1 cent to $2.46 per 1,000 cubic feet.

Gold rose 60 cents to $1,499.50 per ounce, silver rose 12 cents to $17.86 per ounce and copper added a penny to $2.67 per pound.

The dollar fell to 108.68 Japanese yen from 108.62 yen on Thursday. The euro weakened to $1.1080 from $1.1108.

___

AP Business Writer Stan Choe contributed.

KSL 5 TV Live

Top Stories

AP

WASHINGTON, DC - FEBRUARY 08:  U.S. Rep. Marjorie Taylor-Greene (R-GA) holds up a poster of a Twitt...
Farnoush Amiri and Barbara Ortutay

Ex-Twitter execs deny pressure to block Hunter Biden story

Former Twitter executives conceded to Congress that they made a mistake by blocking a story about Hunter Biden, the president’s son, from the social media platform in the run-up to the 2020 election.
1 day ago
President Joe Biden delivers the State of the Union address to a joint session of Congress at the C...
Zeke Miller, Seung Min Kim and Lisa Mascaro, Associated Press

Biden in State of Union exhorts Congress: ‘Finish the job’

President Joe Biden has exhorted Republicans in his State of the Union address to work with him to “finish the job” of rebuilding the economy and uniting the nation.
1 day ago
Rep. George Santos, R-N.Y., Rep. Matt Gaetz, R-Fla., and other Republicans gather in the House Cham...
Lisa Mascaro and Mary Clare Jalonick, Associated Press

GOP on GOP: Romney scolds Santos, ‘You don’t belong here’

Congressman George Santos' presence at the center aisle for Tuesday night's speech was met with a stern rebuke from a fellow Republican, Sen. Mitt Romney of Utah.
1 day ago
SANTA FE, NEW MEXICO - OCTOBER 22: A general view shows a locked gate at the entrance to the Bonanz...
Associated Press

Alec Baldwin wants prosecutor in on-set death case dropped

Defense attorneys for actor Alec Baldwin are seeking to disqualify the special prosecutor in the case against him stemming from the fatal shooting of a cinematographer on a New Mexico film set.
1 day ago
People try to reach people trapped under the debris of a collapsed building in Malatya, Turkey, Tue...
Mehmet Guzel, Ghaith Alsayed, Suzan Fraser and Zeynep Bilginsoy, Associated Press

Hope fading as deaths in Turkey, Syria quake near 12,000

Stretched rescue teams in Turkey and Syria are searching for signs of life in the rubble of thousands of buildings toppled by a catastrophic earthquake.
2 days ago
FILE: Powerball and Mega Millions lottery tickets are displayed on January 3, 2018 in San Anselmo, ...
Associated Press

Lucky player in Seattle suburb wins $754.6M Powerball prize

A single winning ticket for a $754.6 million Powerball jackpot was sold at a department store in a Seattle suburb, Washington state lottery officials said Tuesday.
2 days ago

Sponsored Articles

vintage photo of lighting showroom featuring chandeliers, lamps, wall lights and mirrors...
Lighting Design

History of Lighting Design | Over 25 Years of Providing Utah With the Latest Trends and Styles

Read about the history of Lighting Design, a family-owned and operated business that paved the way for the lighting industry in Utah.
Fiber Optical cables connected to an optic ports and Network cables connected to ethernet ports...
Brian Huston, CE and Anthony Perkins, BICSI

Why Every Business Needs a Structured Cabling System

A structured cabling system benefits businesses by giving you faster processing speeds and making your network more efficient and reliable.
notebook with password notes highlighted...
PC Laptops

How to Create Strong Passwords You Can Actually Remember

Learn how you can create strong passwords that are actually easy to remember! In a short time you can create new ones in seconds.
house with for rent sign posted...
Chase Harrington, president and COO of Entrata

Top 5 Reasons You May Want to Consider Apartment Life Over Owning a Home

There are many benefits of renting that can be overshadowed by the allure of buying a home. Here are five reasons why renting might be right for you.
Festive kitchen in Christmas decorations. Christmas dining room....
Lighting Design

6 Holiday Decor Trends to Try in 2022

We've rounded out the top 6 holiday decor trends for 2022 so you can be ahead of the game before you start shopping. 
Happy diverse college or university students are having fun on their graduation day...
BYU MBA at the Marriott School of Business

How to Choose What MBA Program is Right for You: Take this Quiz Before You Apply!

Wondering what MBA program is right for you? Take this quiz before you apply to see if it will help you meet your goals.
Stocks Post Gains On Solid Earnings, US-China Trade Optimism