The Dow Jones industrial average surged more than 400 points Friday as renewed optimism over trade talks between the U.S. and China put investors in a buying mood.
The rally marked a turnaround from a day earlier, when disappointing holiday sales data led to a modest sell-off. Friday's gains helped push the benchmark S&P 500 index to its third consecutive weekly gain.
Financial, healthcare, technology and industrial stocks accounted for much of the broad wave of buying.
U.S. markets will be closed Monday in observance of Presidents Day.
Two days of trade talks wrapped up Friday in Beijing. China's government said negotiators will again meet in Washington next week for more negotiations aimed at ending the trade war between the world's largest economies.
Hanging over the talks is a March 2 deadline set by President Trump, after which the U.S. is set to impose additional tariffs on Chinese goods, escalating a trade dispute that has already raised costs for companies and consumers. Trump has said that there is a possibility he would extend that deadline if the two countries are close to a deal, however.
The S&P 500 index gained 29.87 points, or 1.1%, to 2,775.60. The Dow climbed 443.86 points, or 1.7%, to 25,883.25. The Nasdaq composite rose 45.46 points, or 0.6%, to 7,472.41.
While the trade conflict remains a focus of the market, a resolution may not be enough to ease a growing sense among investors that the global economy is slowing, setting the stage for weaker corporate earnings growth this year, said Willie Delwiche, investment strategist at Baird.
“I'm not one to think that getting this trade deal done is going to all of a sudden clear up a bunch of uncertainty around the economy, particularly the global economy,” he said. “We need to see some evidence that the global economy is stabilizing. That's really where you're getting the downward pressure on earnings expectations.”
So far, S&P 500 companies have reported 13.1% earnings growth for the October-December quarter, better than the 12.1% gain projected by analysts. But the outlook for earnings growth in the first three months of 2019 has dimmed. Analysts forecast that corporate profits will fall in the current quarter, according to FactSet. That would represent the first decline in nearly three years.
Corporate earnings continued rolling out Friday as the fourth-quarter reporting period nears an end. Chipmaker Nvidia rose 1.8% after reporting a strong fourth-quarter profit. Snack and beverage giant PepsiCo gained 2.9% despite reporting relatively soft results.
Mattel tumbled 18.3% after the toymaker issued a weaker-than-expected 2019 revenue outlook. TrueCar, the online auto-shopping service, saw its shares plunge 25% after it reported a loss.
U.S. benchmark crude climbed 2.2% to settle at $55.59 a barrel in New York. Brent crude, the standard for international oil prices, gained 2.6% to close at $66.25 a barrel in London.
Bond prices fell. The yield on the 10-year Treasury note rose to 2.67% from 2.65% late Thursday.
The dollar fell to 110.45 yen from 110.49 yen on Thursday. The euro weakened to $1.1295 from $1.1301.