NEW YORK (Reuters) – Technology shares led Wall Street’s advance on Friday as a waning bond rally and news of potential German economic stimulus brought buyers back to the market at the close of a turbulent week.
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., August 14, 2019. REUTERS/Eduardo Munoz
While all three major U.S. stock averages were sharply higher, they are still on track to post their third straight weekly declines, having been battered since Monday by accelerating U.S.-China trade animosity, simmering geopolitical tensions and signals from the bond market that sparked fears of imminent recession.
Germany’s coalition government is willing to suspend its balanced budget rule and take on debt, according to Der Spiegel magazine, raising hopes that Europe’s largest economy could steer itself away from recession and cooling worries over a global economic slowdown, for now.
“Germany’s willingness to shift away from long-held practices magnifies the fact that the level of economic uncertainty throughout Europe is quite high,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.
“It’s a bit like the Fed lowering rates more than expected,” Carter added. “Great headline, but further analysis may eventually create uncertainty and weaken markets.”
German stimulus hopes helped the benchmark 10-year U.S. Treasury yield rise from three-year lows, closing the book on a fraught week which saw 10-year yields dip below those of two-year notes, a classic recessionary red flag.
Rising bond yields gave a boost to rate-sensitive banks, sending the S&P 500 Banks index .SPXBK up 2.7%
The Dow Jones Industrial Average .DJI rose 275.17 points, or 1.08%, to 25,854.56, the S&P 500 .SPX gained 39.7 points, or 1.39%, to 2,887.3 and the Nasdaq Composite .IXIC added 130.42 points, or 1.68%, to 7,897.04.
All 11 major sectors of the S&P 500 were firmly in the black, with financials .SPSY, industrials .SPLRCI and technology .SPLRCT enjoying the largest percentage gains
Nvidia Corp (NVDA.O) jumped 6.7% after the chipmaker’s quarterly results bested analyst estimates, helping the Philadelphia chip index .SOX gain 2.8%.
Deere & Co (DE.N) cut its earnings forecast after missing Street profit estimates in the face of the ongoing U.S.-China trade war. Still, the farm equipment maker’s decision to cut costs sent the stock up 3.5%.
General Electric Co (GE.N) surged by 8.7% after Chief Executive Officer Larry Culp bought nearly $2 million in shares in the wake of the conglomerate’s worst one-day percentage drop in 11 years.
The second-quarter earnings season approaches the finish line, with 459 of the companies in the S&P 500 having posted results. Of those, 73% beat Street estimates, according to Refinitiv data.
Analysts now see S&P 500 second-quarter earnings growth of 2.9% year-on-year, per Refinitiv.
Advancing issues outnumbered declining ones on the NYSE by a 3.58-to-1 ratio; on Nasdaq, a 4.00-to-1 ratio favored advancers.
The S&P 500 posted 32 new 52-week highs and 7 new lows; the Nasdaq Composite recorded 33 new highs and 87 new lows.
Reporting by Stephen Culp; Editing by Tom Brown