Wall Street rallies on trade optimism

NEW YORK — Wall Street rallied on Friday, with the Dow and the Nasdaq posting their eighth consecutive weekly gains, as investors grew hopeful that the United States and China would hammer out an agreement resolving their protracted trade war.

All three major US indexes ended the session higher, and for the fourth straight session the S&P 500 held above its 200-day moving average, a key technical level.

Talks between the United States and China will resume in Washington next week, with both sides saying progress has been made toward resolving the two countries' contentious trade dispute.

Tariff-vulnerable industrials provided the biggest lift to the blue-chip Dow, led by bellwethers Boeing Co., 3M Co., United Technologies Inc. and Caterpillar Inc.

"This may be just false hope with the tariff situation as thorny details still need to be agreed upon," said David Carter, chief investment officer at Lenox Wealth Advisors in New York. "It's good news but it’s not over yet."

Indeed, the trade row's effects were reflected in Deere & Co.'s earnings report, which came in below analyst estimates in part because of slowing international trade. The agricultural equipment manufacturer's shares fell 2.1 per cent.

"Solving the trade issue could give global growth the boost it needs," Carter added. "Absent a tariff solution, growth will continue to slow."

With nearly 80 per cent of S&P 500 companies having reported, fourth-quarter earnings season is largely in the rear-view mirror. Analysts now see a profit increase of 16.2 per cent for the quarter, according to Refinitiv data.

Going forward, however, the outlook continues to worsen. First quarter earnings are currently seen falling by 0.5 per cent, the first year-on-year decline since mid-2016. 

The Dow Jones Industrial Average rose 443.86 points, or 1.74 per cent, to 25,883.25, the S&P 500 gained 29.87 points, or 1.09 per cent, to 2,775.6 and the Nasdaq Composite added 45.46 points, or 0.61 per cent, to 7,472.41.

All 11 major sectors in the S&P 500 ended the session in the black.

The rate-sensitive financial sector led the S&P 500's advance, bouncing back from Thursday's sell-off as US Treasury yields crept back up.

Shares of PepsiCo. were up 3.1 per cent, even after the snack and beverage company forecast a surprise drop in full-year profit.

Nvidia Corp. rose 1.8 per cent following the company's forecasts for its current fiscal year topping Wall Street expectations.

The chipmaker gave the second-largest boost to the closely-watched Philadelphia SE Semiconductor index, which was up 0.5 per cent. The index has jumped nearly 18 per cent so far this year.

Amazon.com shares were down 0.9 per cent after scrapping its plans for a New York headquarters.

In fact, each of Amazon's fellow FAANG members, a group of momentum stocks which also includes Facebook Inc., Apple Inc., Netflix Inc. and Google parent Alphabet Inc. also ended the session in the red.

Advancing issues outnumbered declining ones on the NYSE by a 3.66-to-1 ratio; on Nasdaq, a 2.58-to-1 ratio favoured advancers.

The S&P 500 posted 47 new 52-week highs and no new lows; the Nasdaq Composite recorded 86 new highs and 16 new lows. 

Volume on US exchanges was 7.07 billion shares, compared with the 7.43 billion average over the last 20 trading days.