Progress In U.S.-China Trade Talks Contributes To Strength On Wall Street

(RTTNews) - Stocks recovered from an initial move to the downside and moved mostly higher over the course of the trading session on Friday. With the upward move, the Nasdaq and the S&P 500 reached their best closing levels in three months.

The major averages pulled back off their highs of the session but remained firmly positive. The Dow climbed 152.53 points or 0.6 percent to 26,958.06, the Nasdaq advanced 57.32 points or 0.7 percent to 8,243.12 and the S&P 500 rose 12.26 points or 0.4 percent to 3,022.55.

For the week, the tech-heavy Nasdaq surged up by 1.9 percent, the S&P 500 jumped by 1.2 percent and the Dow climbed by 0.7 percent.

The strength on Wall Street came after a statement from the U.S. Trade Representative's office said the U.S. and China have made progress toward finalizing a phase one trade deal.

The statement was released by the USTR following a phone call between U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He.

"They made headway on specific issues and the two sides are close to finalizing some sections of the agreement," the USTR said. "Discussions will go on continuously at the deputy level, and the principals will have another call in the near future."

The upbeat comments about the trade talks added to the positive sentiment seen in reaction to the latest batch of earnings.

Shares of Intel (INTC) moved sharply higher after the semiconductor giant released its third quarter results, spiking by 8.1 percent to a six-month high.

Intel reported better than expected quarterly results, raised its full-year revenue guidance, and added $20 billion to its stock repurchase program.

Credit card giant Visa (V) also posted a notable gain after reporting third quarter results that beat estimates and increasing its quarterly dividend by 20 percent.

Meanwhile, shares of Amazon (AMZN) climbed well off their lows of the session but still ended the session in the red.

The drop by Amazon came after the online retail giant reported weaker than expected third quarter earnings and provided a disappointing forecast for holiday sales.

On the U.S. economic front, revised data released by the University of Michigan showed consumer sentiment improved by slightly less than initially estimated in the month of October.

The report said the consumer sentiment index for October was downwardly revised to 95.5 from the preliminary reading of 96.0. Economists had expected the index to be unrevised.

Despite the downward revision, the consumer sentiment index for October was still up from the final September reading of 93.2.

"Sentiment was insignificantly below the mid month level, with the small loss spread over most components of the Index," said Surveys of Consumers chief economist Richard Curtin.

He added, "The overall level of consumer confidence has remained quite favorable and largely unchanged during the past few years."

Sector News

Reflecting the positive reaction to Intel's earnings, semiconductor stocks turned in some of the market's best performances on the day.

The Philadelphia Semiconductor Index subsequently surged up by 2.1 percent, ending the session at a new record closing high.

Significant strength was also visible among transportation stocks, as reflected by the 1.7 percent gain posted by the Dow Jones Transportation Average.

Steel stocks also moved notably higher amid optimism about a U.S.-China trade deal, with the NYSE Arca Steel Index climbing by 1.6 percent to its best closing level in a month.

Energy, computer hardware and banking stocks also saw considerable strength on the day, while interest rate-sensitive utilities and commercial real estate stocks bucked the uptrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index edged up by 0.2 percent, while China's Shanghai Composite Index rose by 0.5 percent.

European stocks also moved to the upside over the course of the session. While the U.K.'s FTSE 100 Index bucked the uptrend and edged down by 0.1 percent, the German DAX Index rose by 0.2 percent and the French CAC 40 Index climbed by 0.7 percent.

In the bond market, treasuries came under pressure amid renewed optimism about a U.S.-China trade deal. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.5 basis points to 1.801 percent.

Looking Ahead

The Federal Reserve's monetary policy decision is likely to be in focus next week, with CME Group's FedWatch tool currently indicating a 93.5 percent chance of another quarter point interest rate cut.

The monthly jobs report is also likely to attract some attention along with reports on third quarter GDP, personal income and spending and manufacturing activity.

On the earnings front, Google parent Alphabet (GOOGL), AT&T (T), General Motors (GM), Merck (MRK), Pfizer (PFE), Amgen (AMGN), General Electric (GE), Facebook (FB), Starbucks (SBUX), and Exxon Mobil (XOM) are just a few of the companies due to report their quarterly results next week.