Stocks rose on Wall Street on Friday, recovering a chunk of their losses from earlier in the week. Technology and industrial companies jumped.
Traders took a brighter view on the economy, and U.S. companies continued to report solid fourth-quarter results. Energy and consumer-focused companies as well as basic materials makers all did better than the broader market. Those industries and stocks tend to benefit the most when economic growth improves.
Markets didn’t react much to news that President Trump and congressional leaders reached a deal to reopen the federal government for three weeks while talks continue over Trump’s demands for money to build a wall along the U.S.-Mexico border.
Trump announced the agreement to break the 35-day impasse as delays at airports and widespread flight disruptions brought new urgency to efforts to end the partial government shutdown. Trump almost immediately threatened another shutdown or emergency action if he did not get a “fair deal.”
The Standard & Poor’s 500 index surged 10% during the shutdown, which started when the stock market was at its low point in December. Some experts feel the standoff won’t have a lasting effect on the market or the economy, with government employees resuming their spending as soon as they are paid for their work in January.
But Kristina Hooper, chief global market strategist for Invesco, said the magnitude of the shutdown might have major effects on consumers’ confidence.
“If the government can’t work together in times where there are no real crises, imagine what would happen in an environment where there was a real crisis,” she said. “It’s hard to envisage Congress and the executive branch putting their differences aside and working together.”
She added that the government’s dysfunction might contribute to the United States’ credit being downgraded, and if that happens, investors are likely to flee the stock market and pour money into the bond market. That’s what they did when the country’s credit rating was cut in 2011.
The S&P 500 index rose 22.43 points, or 0.8%, to 2,664.76 on Friday, but it fell 0.2% for the week after big gains in the last four weeks.
The Dow Jones industrial average rose 183.96 points, or 0.7%, to 24,737.20. The Nasdaq composite climbed 91.40 points, or 1.3%, to 7,164.86. The Russell 2000 index of smaller company stocks climbed 18.45 points, or 1.3%, to 1,482.85.
Hard-drive maker Western Digital jumped 7.5% to $43.16 after saying it expected business to improve in the second half of its fiscal year. That overshadowed a weaker-than-expected second quarter. Its competitor Seagate Technology climbed 6.6% to $43.66.
Other tech stocks gained ground too. Apple rose 3.3% to $157.76. Those gains outweighed disappointing quarterly results and weak forecasts from the world’s largest chipmaker, Intel, whose shares slumped 5.5% to $47.04.
Starbucks rose 3.6% to $67.09 after the coffee giant reported revenue and profit growth with the help of a strong holiday season. The results topped expectations, and the company gave an upbeat outlook for the year.
Drugmakers fell sharply. AbbVie slid 6.2% to $80.54 after the company said international sales of its drug Humira weakened in response to growing competition in key markets including Europe. AbbVie gets most of its revenue from Humira, which is the top-selling prescription medication in the world in terms of revenue. Drugmakers and healthcare stocks stumbled this week.
The S&P 500 has climbed 6.3% in January, an echo of its big rally one year earlier. The index surged 7.5% in the first few weeks of January 2018 before a sharp plunge. That set the stage for the stock market’s tumultuous year — its worst one in a decade. Experts say 2019 could be similarly rocky as investors react to political uncertainty and slowing economic growth worldwide, exacerbated by trade tensions and rising interest rates.
The Wall Street Journal reported that the Federal Reserve might soon stop shrinking its bond portfolio. The nation’s central bank bought trillions of dollars in bonds to help keep interest rates low and help the economy recover from the Great Recession. It started gradually letting its portfolio shrink recently, but investors are worried that will tighten credit conditions, which could slow economic growth.
“Although the economic data are pretty solid right now, the markets have basically told us that we are not tolerating additional tightening,” said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.
Bond prices fell. The yield on the 10-year Treasury note rose to 2.75% from 2.71%.
U.S. crude oil rose 1.1% to $53.69 a barrel in New York. Brent crude, used to price international oils, rose 0.9% to $61.64 in London.
Wholesale gasoline stayed at $1.39 a gallon. Heating oil rose 0.3% to $1.89 a gallon. Natural gas climbed 2.5% to $3.18 per 1,000 cubic feet.
The dollar rose to 109.64 yen from 109.53 yen. The euro rose to $1.1414 from $1.1389.