U.S. stocks rise again to build on four-week rally

Marley Jay, The Associated Press</span>
Published Thursday, January 17, 2019 11:39PM EST
Last Updated Friday, January 18, 2019 11:01AM EST

NEW YORK -- U.S. stocks are rising again Friday morning as the market wraps up another strong week with big gains for technology and industrial companies, while banks rose after more of them posted strong fourth-quarter reports. Stock indexes have made big gains since reaching a low point on Christmas Eve, as the S&P 500 has risen for four weeks in a row. Electric car maker Tesla stumbled, however, after saying it will cut 7 per cent of its jobs.

KEEPING SCORE: The S&P 500 index rose 20 points, or 0.8 per cent, to 2,656 as of 10:25 a.m. Eastern time. The Dow Jones Industrial Average gained 166 points, or 0.7 per cent, to 24,536. The Nasdaq composite added 44 points, or 0.6 per cent, to 7,128. The Russell 2000 index of smaller and more U.S.-focused companies picked up 8 points, or 0.6 per cent, to 1,475.

The S&P 500 is on track for its fourth straight weekly gain. It's up 2.3 per cent this week and has risen at least 1.9 per cent every week during the rally. It's been a long time since stocks had a similar winning streak: according to Ryan Detrick of LPL Financial, the last time the S&P 500 rose at least 1.5 per cent a week for four weeks was in early 2009, immediately after the stock market hit its low point in the wake of the 2007-08 financial crisis that caused the Great Recession. That streak lasted for six weeks.

WHERE ARE WE NOW?: Stocks sank in late 2018 as investors worried that global economic growth, and U.S. growth in particular, was going to get worse than they thought. Threats including the U.S.-China trade dispute, rising interest rates in the U.S., slowing growth in China and Europe, and unstable political situations like Brexit all made it seem like 2019 was going to be a disappointing year. Some investors felt a recession in the U.S. or the global economy was a possibility in late 2019 or in 2020.

Over the last three weeks, investors have taken a breath and decided things may not get that bad. The U.S. economy doesn't appear to have slowed much, and there have been some signs the U.S. and China are making gradual progress in their trade negotiations. The Federal Reserve has suggested it doesn't plan to raise interest rates much further in light of slowing growth and the stock market's recent turmoil. The S&P 500, the main benchmark for U.S. stocks, fell 19.8 per cent from late September to late December and has now recovered a little more than half of those losses.

MACHINE EARNING: Trucking and logistics company J.B. Hunt Transportation jumped 5.9 per cent to $105.67 after its fourth-quarter report, and railroad company Union Pacific gained 1.8 per cent to $157.47. Aerospace giant Boeing rose 1 per cent to $362.59.

Among technology companies, software maker Oracle added 1.2 per cent to $49.17 and chipmaker Broadcom rallied 1.6 per cent to $259.34.

BANKS: Financial stocks continued to do better than the rest of the market. State Street rose 4.2 per cent to $74.03 and SunTrust jumped 3.8 per cent to $60.24 following their quarterly reports.

Many large banks reported their fourth-quarter results this week, and they've benefited from gradually rising interest rates as well as the corporate tax cut and other tax law changes at the end of 2017. Bank stocks had a bad year in 2018, in large part because investors weren't sure where interest rates would go. But the stocks tend to do better when traders feel better about the health of the economy because when it's growing, businesses and individuals tend to take out more loans. The S&P 500's index of bank stocks has jumped 8 per cent over the last month, while the S&P 500 itself is up 4 per cent.

TESLA CUTS: Tesla fell 9.8 per cent to $31.33 after the company said it would cut 7 per cent of its jobs. CEO Elon Musk said the cuts are meant to reduce costs as the company lowers the price for its cars. He said in a note to staff that the road ahead is "very difficult."

THE SHOE FITS: VF Corp, the maker of brands including Timberland and North Face, surged 11.4 per cent to $81.65 after it raised its forecasts for the year.

BONDS: Bond prices fell. The yield on the 10-year Treasury note rose to 2.76 per cent from 2.74 per cent.

U.S.-CHINA TRADE: China said that its economy czar, Vice Premier Liu He, will visit Washington for talks on Jan. 30-31 aimed at ending the tariff war sparked by U.S. complaints about Beijing's technology ambitions. Business groups and economists were looking for Liu and his American counterpart, U.S. Trade Representative Robert Lighthizer, to take part in talks as a sign lower-level negotiations earlier in Beijing made progress. The Wall Street Journal reported Treasury Secretary Steven Mnuchin was willing to roll back U.S. tariff hikes on Chinese goods, though it said Lighthizer and other officials opposed that idea.

ENERGY: Benchmark U.S. crude jumped 2.6 per cent to $53.42 in New York. Brent crude, used to price international oils, added 1.9 per cent to $62.34 a barrel in London.

OVERSEAS: European stocks jumped. Germany's DAX climbed 2 per cent and the FTSE 100 in Britain rose 1.7 per cent. The French CAC 40 gained 1.5 per cent.

Hong Kong's Hang Seng gained 1.2 per cent and the Nikkei 225 in Japan rose 1.3 per cent. Seoul's Kospi added 0.8 per cent.

Let's block ads! (Why?)