Stocks are closing higher as investors digest a report saying the U.S. and China could hammer out a trade deal within the next month and more in Friday’s Stock Market Update.
U.S. officials are reportedly preparing a deal that could be signed within a month, according to news agency Bloomberg. The trade war between the world’s largest economies has raised prices for consumers and companies. It’s also deepened concerns that escalating tariffs could worsen the global economy’s slowdown.
President Donald Trump held off on a threat to impose higher tariffs on $200 billion of Chinese products as negotiations continued. Washington accuses Beijing of stealing foreign companies’ technology or pressuring them to hand it over.
Health care, technology and consumer products companies accounted for much of the market’s gains. Retailers also rose. Gap surged after saying it plans to spin off its Old Navy brand. Foot Locker rose after reporting strong financial results and a solid forecast. Tesla fell after CEO Elon Musk warned that the electric car maker is unlikely to see a profit in the first quarter.
STOCK MARKET UPDATE
THE QUOTE: While the market’s recent gains already reflect investors’ optimism for a U.S.-China trade deal, stocks could get a further boost from an official resolution to the dispute, said Eric Wiegand, senior portfolio manager for Private Wealth Management at U.S. Bank.
“If we were able to see a successful conclusion to the negotiations that could be a near-term catalyst,” he said.
KEEPING SCORE: The S&P 500 index rose 19 points, or 0.7 percent, to 2,803. The Dow Jones Industrial Average rose 110 points, or 0.4 percent, to 26,026. The Nasdaq rose 62 points, or 0.8 percent, to 7,595. Major indexes in Europe finished higher.
OLD NAVY SAILING AWAY: Gap surged 18.2 percent after it told investors it will spin off its Old Navy brand into a separate company. The retailer will retain its namesake brand, along with Banana Republic and others, in a new, yet to be named company.
The split comes as Old Navy has thrived while Gap struggles with increasing competition from the likes of Target and Amazon.
RATTLED: Several supermarket operators declined after The Wall Street Journal reported that Amazon is planning to open dozens of grocery stores in several U.S. cities. The e-commerce giant has been making a big push into brick-and-mortar stores, buying up the Whole Foods grocery chain in 2017 and opening cashier-less convenience stores around the country.
The news sent Amazon shares 2 percent higher. Supermarket operator Kroger slid 4.4 percent. Walmart, which also sells groceries, dropped 1 percent. Sprouts Farmers Markets fell 0.9 percent.
RUNNING START: Foot Locker climbed 5.7 percent after the footwear and athletic apparel retailer blew past investor expectations for the fourth quarter. The company also forecast double-digit profit growth in 2019.
The company’s same-store sales, which measures growth at existing stores, hit 9.7 percent, more than doubling what Wall Street expected.
WEAK CHARGE: Tesla tumbled 8 percent after CEO Elon Musk said the electric car maker is unlikely to turn a profit in the first quarter. The company also began selling a $35,000 version of its Model 3. The car previously cost at least $42,900.
Tesla is cutting costs by shifting to online sales of its vehicles. It will close most stores but leave some open as galleries or “information centers” in high-traffic areas.
“This is the only way to achieve the savings for this car and be financially sustainable,” Musk told reporters during a conference call. “It is excruciatingly difficult to make this car for $35,000 and be financially sustainable.”
ROLLING THE DICE: Caesars Entertainment gained 3.3 percent after the casino operator said it will replace three board members with directors chosen by billionaire activist investor Carl Icahn.
© The Associated Press. All rights reserved.