Stocks jump, with Warren Buffett helping Apple reach an all-time high
U.S. stocks made up for a shaky week with a strong finish Friday as Apple led a rally in technology companies. The tech giant hit an all-time high after Warren Buffett said he had made another big investment in it.
Stocks had a mixed start after trade talks between the United States and China ended with few signs of progress. The April jobs report showed that hiring continued at a solid clip and wages continued to grow at a slow pace. Apple surged after Buffett said his company, Berkshire Hathaway, bought 75 million Apple shares during the first quarter.
Alphabet, Cisco Systems and other technology companies rose, and retailers, banks and household goods-makers also rallied. Investors also cheered strong first-quarter results from companies such as Shake Shack and Activision Blizzard.
“We went into this earnings season with very high expectations,” said Quincy Krosby, chief markets strategist for Prudential Financial. “When you go in with such high expectations, you expect near perfection.”
The Standard & Poor’s 500 index climbed 33.69 points, or 1.3%, to 2,663.42. The Dow Jones industrial average rose 332.36 points, or 1.4%, to 24,262.51. The Nasdaq composite jumped 121.47 points, or 1.7%, to 7,209.62. The Russell 2000 index of smaller-company stocks advanced 19.05 points, or 1.2%, to 1,565.60.
Overall, stocks have taken small losses in choppy trading over the last two weeks. But for Apple, this was the best week in 6 1/2 years.
Apple rose 3.9% to $183.83 after Buffett told CNBC that his company boosted its investment in Apple to a total of more than 240 million shares. Buffett told CNBC about the purchase ahead of Berkshire Hathaway’s annual meeting this weekend. Berkshire Hathaway stock rose 2.1% to $195.64.
For the week, Apple jumped 13.3%. It reported solid quarterly results Tuesday, and investors were pleased and relieved by its forecast of solid iPhone sales. Apple also raised its dividend and announced a big stock repurchase.
Companies have posted good first-quarter results, but stocks haven’t necessarily followed suit as investors worried about the U.S.-China trade spat, rising interest rates and other issues. But on Friday, investors responded.
After better-than-expected reports, burger chain Shake Shack surged 18% to $55.95, and music-streaming company Pandora Media leaped 19.8% to $6.89. Video gamemaker Activision Blizzard climbed 4.5% to $69.84. The stock had slipped Thursday afternoon after Activision’s results were released early.
U.S. employers stepped up hiring modestly in April, and the hiring estimate from March was revised up. That is evidence the economy remains resilient even though some businesses are concerned about a possible trade war. While many employers say it’s difficult to find qualified workers, they have yet to significantly boost pay in most industries, a trend that continued last month.
“That may not be good for Main Street, but it’s what Wall Street wanted to see,” Prudential’s Krosby said.
The Trump administration asked China to reduce its trade deficit with the United States by $200 billion by the end of 2020, striking an assertive stance in talks aimed at averting a trade war between the world’s largest economies. It also wants China to immediately stop providing subsidies to certain industries listed in a key industrial plan and end some of its policies related to technology transfers, a key source of tension underlying the dispute. Although the trade tensions have rattled investors, many market watchers think the two sides eventually will come to a deal that doesn’t disrupt trade much.
Engineering and construction company Fluor plunged 22.4% to $45.76 after it slashed its profit forecast because a gas-fired power project suffered “continued challenges.” The company took an unexpected loss in the first quarter and now expects a profit of $2.10 to $2.50 per share for the year, down from $3.10 to $3.50 per share.
Bond prices rose early, then gave up that gain. The yield on the two-year Treasury note rose to 2.49% from 2.48%. The yield on the 10-year Treasury note remained at 2.95%. That helped banks recover from an early loss. Lower bond yields mean lower rates for mortgages and other types of loans, which reduces profits for banks. Companies that pay big dividends didn’t rise as much as the rest of the market.
Benchmark U.S. crude rose 1.9% to $69.72 a barrel in New York. Brent crude, the international standard, rose 1.7% to $74.87 a barrel in London.
Wholesale gasoline jumped 1.3% to $2.11 a gallon. Heating oil climbed 2% to $2.15 a gallon. Natural gas fell 0.6% to $2.71 per 1,000 cubic feet.
Gold rose 0.2% to $1,314.70 an ounce. Silver rose 0.4% to $16.52 an ounce. Copper rose 0.2% to $3.09 a pound.
The dollar fell to 109.11 yen from 109.73 yen. The euro fell to $1.1962 from $1.1993.
Britain’s FTSE 100 rose 0.9%, and the DAX in Germany advanced 1%. France’s CAC 40 gained 0.3%. The South Korean Kospi sank 1%, and Hong Kong’s Hang Seng index lost 1.3%. Markets in Japan remained closed for a public holiday.
UPDATES:
2:15 p.m.: This article was updated with closing prices, context and analyst comment.
This article was originally published at 8:45 a.m.
