Stocks rallied into the close, ending just shy of session highs, as optimism over progress on U.S.-China trade talks appeared to overshadow concerns about a slowing economic expansion, while investors embraced the market debut of ride-hailing company Lyft Inc., shares of which closed 8.7% higher than where they priced Thursday evening.
The session marked the final trading day for the first quarter of 2019, with the S&P 500 notching its best quarterly performance in nearly a decade.
How did the benchmarks fare?
The Dow Jones Industrial Average DJIA, +0.82% rose 211.22 points, or 0.8%, to 25,928.68, while the S&P 500 index SPX, +0.67% gained 18.96 points to 2,834.40, a rise of 0.7%. The Nasdaq Composite Index COMP, +0.78% advanced 60.16 points, or 0.8%, to 7,729.32. DJIA, +0.82%
The S&P 500 closed out the week with a 1.2% gain, a 1.8% monthly rise and a first-quarter advance of 13.1%, the best quarterly performance since the third quarter of 2009.
The Dow notched a 1.5% weekly gain, while eking out a roughly 0.1% gain for March, and an 11.2% charge higher in the first quarter.
The Nasdaq, meanwhile, logged a 1.1% weekly rise, while up 2.6% for the month and advancing 16.5% for the first three months of the year. The small-cap Russell 2000 RUT, +0.30% however, put in a 2.3% March drop, trimming its quarterly advance to about 14.2%.
What’s drove the market?
Shares of Lyft Inc. LYFT, +8.74% made their debut on the Nasdaq at a price of $87.24, more than 20% above the $72 level at which the shares priced late Thursday, giving the ride-sharing company an initial market capitalization of roughly $25 billion. The stock pulled back in the subsequent hours, and closed the day up 8.7%. Strong demand for the stock suggested investor confidence in the health of the bull market, analysts said.
Apparent progress on trade talks between Beijing and Washington were credited with buoying stocks. China’s Shanghai Composite Index SHCOMP, +3.20% rose 3.2% and the small-capitalization Shenzhen Composite Index 399106, +3.38% added 3.4%.
On Friday, U.S. Treasury Secretary Steven Mnuchin tweeted that “constructive” discussions between China’s trade envoy and U.S. officials, including U.S. Trade Representative Robert Lighthizer, concluded:
Hopes for progress on the long-running tariff dispute had helped to support a market rally in recent days, even as weaker data domestically contributed to fears that slack in growth outside the U.S. is beginning to affect the business climate.
On Thursday, the final read of gross domestic product for the last three months of 2018, a measure of goods and services produced across the economy, slowed to a 2.2% annual rate from an earlier 2.6% estimate, underscoring anxieties about fading momentum wrought from corporate tax cuts enacted in late 2017.
Falling Treasury yields, and an inversion of the yield curve, have reflected growth fears on Wall Street. The yield on the benchmark 10-year Treasury note TMUBMUSD10Y, +0.58% on Friday was at 2.40% from 2.389% Thursday, but still near a 15-month low. Bond yields and prices move in opposite directions.
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Meanwhile, Britain’s efforts to exit from the European Union continued to play out, with lawmakers once again voting to reject Prime Minister Teresa May’s Brexit deal by a margin of 58 votes. The rejection increases the chance that the U.K. will have to take part in the European elections scheduled for late May, the prime minister said in subsequent comments.
Read: Gush of government spending that boosted economy last year is fading
What are strategists saying?
Shares of Lyft popping after their debut suggest that “at this moment in time investors are optimistic for the prospects of equities at large despite the backdrop of risks, and it speaks to the anticipation that investors have for potentially transformative companies like Lyft,” Mike Loewengart, vice president of investment strategy at E-Trade told MarketWatch.
Nevertheless, he warned investors should take a “cautious approach” to companies like Lyft, which “have no track record and have yet to turn a profit,” while noting that “the road to profitability may not be a smooth one.”
Jim Solloway, chief market strategist at SEI Investments, said in an interview with MarketWatch that headlines this week indicating progress on issues that had bedeviled American and Chinese trade negotiators, like enforcement mechanisms and forced technology transfer have buoyed investor sentiment.
“The markets are even underestimating the total positive impact” the conclusions of these negotiations will have on stock valuations, he said. “I think we’ll see a more comprehensive deal than investors have priced in. The recent delay in deadlines for a deal underscores that both sides are willing to grapple with the toughest issues in areas like tech transfer, cyber theft and allowing foreign companies to get into various sectors into the Chinese economy without having to take on a partner,” Solloway added.
What other stocks were in focus?
Shares of Wells Fargo & Co. WFC, -1.57% fell 1.6%, after embattled CEO Tim Sloan unexpectedly announced his retirement effectively immediately on Thursday, as the executive was viewed as failing to repair the reputation of the scandal-ridden large-capitalization bank.
CarMax, Inc. KMX, +9.61% stock rose 9.5%, after the used-car retailer reported fiscal fourth-quarter earnings that beat expectations, while revenue and same-store sales came up shy.
Shares of BlackBerry Ltd. BB, +13.63% rose 13.6%, after the cybersecurity company reported a fourth-quarter profit and revenue that beat expectations.
Celgene Corp.
CELG, +7.88%
stock closed 7.9% higher, after the company announced a key European regulator “adopted positive opinions for two triplet regimens” based on proprietary Celgene drugs. Investors are also awaiting an opinion from Institutional Shareholder Services on whether Bristol-Myers Squibb
BMY, -0.27%
shareholders should approve a $74 billion takeover of the company.
What data were in focus?
U.S. personal incomes rose 0.2% in February after falling in the month before, the Commerce Department said Friday. The report excluded consumer spending and inflation data for February, due to the lingering effects of the government shutdown.
The PCE index for January, however, showed prices rising just 0.1%, bringing the annual inflation rate down to 1.4% from 1.8%, the lowest level since 2016 and well below the Fed’s 2% target.
The Chicago-area manufacturing sector expanded more slowly than expected, with the Chicago PMI posting a reading of 58.7, versus consensus expectations of 61.0, according to FactSet. Any reading above 50 indicates expansion.
New-home sales ran at a seasonally adjusted annual 667,000 pace in February, the Commerce Department said Friday. That was 4.9% higher than January’s rate, but just 0.6% above year-ago levels.
Consumer sentiment rose for the second month in a row, according to the University of Michigan’s consumer sentiment index, which rose to 98.4 in March from 93.8 in February
What did other markets trade?
European equity markets closed higher, with the Stoxx 600 Europe index SXXP, +0.60% gaining 0.6%. Japan’s NIKKEI 225 rose 0.8%, while Hong Kong’s Hang Seng Index HSI, +0.96% rose 1%.
In commodities markets, crude-oil prices CLK9, +1.48% traded firmly higher, and gold prices GCJ9, +0.08% edged slightly into the green, even as a broad measure of the U.S. dollar DXY, +0.00% tipped into positive territory.
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