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Small-company stocks shine on an otherwise ho-hum day

Small-company stocks shine on an otherwise ho-hum day
The New York Stock Exchange. (Bryan R. Smith / AFP/Getty Images)

U.S. stocks hardly moved Friday as the market wrapped up a solid week. Smaller companies rose following signs of sustained economic growth and reports that more tariffs on Chinese goods could be on the way.

Stocks rose in early trading after the Federal Reserve said production of cars and energy jumped in August. The Commerce Department said sales by retailers grew only slightly in August after a big gain in July.

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“It's a reflection of stronger economic growth,” said Kate Warne, an investment strategist for Edward Jones. “It continues to bode well for strength going into the fall and later in the year.”

Bond yields jumped Friday as investors interpreted the Federal Reserve report as a sign the economy will keep growing and interest rates will keep rising. That helped bank stocks but hurt stocks that pay high dividends.

Retail and healthcare stocks also took small losses.

The Standard & Poor’s 500 index rose 0.80 of a point to 2,904.98. The index rose all five days this week after a four-day losing streak last week.

The Dow Jones industrial average edged up 8.68 points to 26,154.67. The Nasdaq composite slipped 3.67 points to 8,010.04.

The combination of trade worries and positive economic news helped smaller companies, which tend to do more business in the United States than larger companies do. That makes them less vulnerable to flare-ups in trade tensions. The Russell 2000 index climbed 7.40 points, or 0.4%, to 1,721.72.

Bloomberg News reported that President Trump has told aides to go ahead with tariffs on $200 billion worth of imports from China. The report said the administration may be having difficulty finding products it can tax that won't result in major complaints from consumers and businesses.

China said Thursday that the United States had reached out to open a new round of trade talks. The new round of tariffs would represent a major escalation in the U.S.-China conflict, which has lasted most of this year.

Industrial companies rose after the Federal Reserve's report. Aerospace firm Boeing advanced 1.2% to $359.80, and shipbuilder Huntington Ingalls climbed 1.6% to $252.90.

The industrial data is a sign the U.S. economy is likely to keep growing, which means the Federal Reserve is likely to continue raising interest rates. It is expected to raise interest rates later this month, the third increase this year out of an expected four.

The yield on the 10-year Treasury note rose to 2.99% from 2.96%.

Banks and financial companies rose as higher long-term interest rates help them make more money from mortgages and other types of loans. Prudential Financial shares climbed 2.9% to $99.86. SVB Financial Group shares rose 1.4% to $319.29.

A series of gas explosions killed one person, injured at least 10 and forced evacuations in three communities north of Boston. The Massachusetts Emergency Management Agency blamed the fires on gas lines that had become over-pressurized. They are served by Columbia Gas, a unit of NiSource. NiSource's stock dived 11.7% to $24.79.

Hurricane Florence came ashore in North Carolina on Friday morning. Although it could do significant damage to the region, it's not expected to have a big effect on the overall economy. Economists at IHS Markit said the hurricane might slow growth in the third quarter a bit but would likely contribute to growth in the fourth quarter.

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Shares in Canadian marijuana company Tilray, which have made huge gains in the last two months, slumped after Politico reported that the U.S. Customs and Border Patrol may ban people who work in the marijuana industry from entering the country. Tilray slumped 8.9% to $109.05. The stock was valued at $17 when Tilray went public in July. Canada is set to legalize marijuana in October, and stocks in the industry have soared recently.

Two competitors, Canopy Growth and Cronos Group, continued to rise. Canopy has doubled in valued this year, and Cronos is up 34%.

Benchmark U.S. crude rose 0.6% to $68.99 a barrel in New York. Brent crude, used to price international oils, slipped 0.1% to $78.09 a barrel in London.

Wholesale gasoline fell 1.1% to $1.97 a gallon. Heating oil fell 0.6% to $2.21 a gallon. Natural gas dropped 1.8% to $2.77 per 1,000 cubic feet.

The dollar rose to 112.03 yen from 111.88 yen. The euro slipped to $1.1632 from $1.1692.

2:35 p.m.: This article was updated with closing prices, context and analyst comment.

This article was originally published at 10:55 a.m.

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