U.S. stocks traded higher Friday, with the Dow Jones Industrial Average up more than a 100 points, as a rebound in China’s main equity benchmarks assuaged dread about waning global growth, even as Beijing reported the worst rate of economic expansion since 2009.
The S&P 500 and the Dow are on track to snap a three-week losing streak as the market quietly marks the 31st anniversary of the 1987 crash.
How are benchmarks faring?
The Dow Jones Industrial Average
DJIA, +0.81%
rose 169 points, or 0.7%, to 25,549, while the S&P 500 index
SPX, +0.90%
advanced 21 points, or 0.8%, to 2,793. The Nasdaq Composite
COMP, +1.02%
gained 63 points, or 0.8%, to 7,546.
For the week, the Dow was set to rise 0.8%, the S&P 500 is on track to be up 0.7%, and the Nasdaq are on pace for an advance of 0.8%. If the blue-chip index and the S&P 500 manage to finish the week in the green, they would halt a skid of three straight weeks, while the Nasdaq will end its weekly losses at two straight.
What is driving the market?
China’s main equity benchmarks posted their best daily gains since early August to end another ugly week on a high note, after Beijing officials offered calming comments about the health of the economy following third-quarter gross domestic product that came in weaker than expected.
China’s GDP grew 6.5% between July and September from the same quarter a year earlier, down slightly from 6.7% growth in the previous quarter and falling short of analysts’ expectations of 6.6% growth. However, the disappointing results were shaken off after officials said they were focused on supporting the stock market, offering a brief respite for a region that has seen withering losses amid a trade clash with the U.S.
China’s central bank governor and banking and securities regulators said recent volatility in Chinese stocks didn’t reflect the nation’s economic fundamentals and a “stable financial system.”
Investors fear that if China, the second-largest economy, begins to experience further pains, it could spillover first into emerging-market economies and then developed markets like the U.S.
Read: Here’s why stock-market investors suddenly freaked out over rising bond yields
See: Here’s why investors are anxious about China’s next move
Market participants were also watching escalating tensions between the U.S. and Saudi Arabia as Treasury Secretary Steven Mnuchin on Thursday announced that he was pulling out of an investment conference in Riyadh in response to the disappearance of Saudi journalist Jamal Khashoggi, a U.S. resident.
Which data and Fed speakers are in focus?
Existing home sales fell 3.4% in August, according to the National Association of Realtors, the lowest level since November 2015.
Atlanta Fed President Raphael Bostic is due to talk at 12 p.m. in armchair discussion in Macon, Ga., while Dallas Federal Reserve Bank President Robert Kaplan will participate in a Q&A in New York at the Princeton Club.
What are strategists saying?
Alec Young, managing director of global markets research at FTSE Russell told MarketWatch that Thursday’s pullback should cause investors to question whether third-quarter earnings season will be enough to power stocks to new highs.
“Everyone accepts that earnings growth will slow next year and that interest rates are going to rise,” he said. “Historically that’s not a great cocktail for stocks.” Young also pointed to a weakening global economy and an overly hawkish Fed as reasons for caution going forward. “I think there’s a chance that the bull market has peaked,” he said.
“The event calendar is rather empty and is thus highly unlikely to come to the markets’ rescue. Focus will again be on earnings, any progress in the Kashoggi case, and the development of the” spread between German and Italian bond yields, wrote analysts at UniCredit in a note.
“We see a very low chance that Moody’s will publish the result of its rating review as early as today, but this remote risk might nevertheless have contributed to yesterday’s spread widening,” they said.
Which stocks are worth watching?
Shares in PayPal Holdings Inc.
PYPL, +9.41%
surged more than 9% after the company boosted its outlook for the fourth quarter.
Proctor & Gamble Company
PG, +7.38%
shares jumped 8.5% after reporting it’s best quarterly sales numbers in five years Thursday. It has contributed 46.31 points to the Dow’s rise this morning.
Chemical giant DowDuPont Inc.
DWDP, -1.14%
said late Thursday that it is taking a $4.6 billion charge in the third quarter. Its shares were off by 0.5% Friday morning.
American International Group Inc.
AIG, -1.33%
expects to post between $1.5 billion and $1.7 billion in pretax catastrophe losses, the insurance giant said. The insurer’s shares were down 2%.
American Express Co.
AXP, +3.71%
delivered third-quarter earnings above estimates and lifted its full-year outlook. Shares gained about 3.7% in early morning action.
Shares of eBay Inc.
EBAY, -8.30%
fell 8.3% after analysts at Stifel Nicolaus downgraded the stock from buy to hold, citing PayPal’s earnings release, which suggested that the online retail would post disappointing gross merchandise volume when it reports on Oct. 30.
How are other markets trading?
Shanghai’s Composite Index
SHCOMP, +2.58%
rallied 2.6% to mark its best one-day rise since Aug. 7, according to FactSet data, while the small-capitalization Shenzhen Composite
399106, +2.58%
also jumped 2.6%, representing its best session since Aug. 9.
Gold futures
US:GCU8
and the U.S. dollar
DXY, -0.12%
was trading flat, and crude futures
US:CLU8
were drifting higher.
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Source : MTV
