All pictures show traders on the floor of the New York Stock Exchange yesterday April 4. Top left chart shows the Dow Jones trading trend. - Reuters
NEW YORK: Wall Street advanced in heavy trading on Friday, with the S&P 500 and the Dow closing the book on their best June in generations, ahead of much-anticipated trade talks between U.S. President Donald Trump and Chinese counterpart Xi Jinping at the G20 summit now underway in Japan.
All three major U.S. stock indexes gained ground at the close of the week, month, quarter and first half of the year, during which time the U.S. stock market has had a remarkable run.
The S&P 500 had its best June since 1955. The Dow posted its biggest June percentage gain since 1938, the waning days of the Great Depression.
From the start of 2019, after investors fled equities amid fears of a global economic slowdown, which sent stock markets tumbling in December, the benchmark S&P 500 jumped 17.3%, its largest first-half increase since 1997.
"The market came to the realization that the world is not going to end," said John Ham, financial adviser at New England Investment and Retirement Group in North Andover, Massachusetts. "Also, (Federal Reserve chair) Powell did a 180 since (the Fed's) last (interest) rate hike, which has put wind in our sails in the first half of the year."
Trump expressed hopes that his meeting with Xi at the G20 summit will be productive, but said he had not made any promises about a reprieve from escalating tariffs.
"Everybody is focused on the Trump/Xi meeting, and most investors are hoping for a ceasefire," Ham added. "At this point it's just a question of how much of a ceasefire we get."
"They're two strong leaders who want to save face. They both want to walk away from it claiming victory."
Financial stocks led the gains in the S&P 500 and the Dow after the big U.S. banks passed the Federal Reserve's "stress test," with the central bank giving the companies a clean bill of health. The S&P 500 Bank index <.SPXBK> gained 2.4%.
Trading volume spiked amid the annual restructuring of the Russell indexes, traditionally one of the largest trading days of the year.
The Dow Jones Industrial Average <.DJI> rose 73.38 points, or 0.28%, to 26,599.96, the S&P 500 <.SPX> gained 16.84 points, or 0.58%, to 2,941.76 and the Nasdaq Composite <.IXIC> added 38.49 points, or 0.48%, to 8,006.24.
All 11 major sectors in the S&P 500 ended the session in positive territory.
Financials <.SPSY>, energy <.SPNY> and tariff-vulnerable industrials <.SPLRCI> were the biggest percentage gainers.
Shares of Apple Inc
Constellation Brands Inc
In economic news, consumer spending rose moderately in May and prices edged higher, implying a slowdown in economic growth and benign inflation pressures, providing the Fed rationales for a possible interest rate cut in July.
Advancing issues outnumbered declining ones on the NYSE by a 2.84-to-1 ratio; on Nasdaq, a 2.66-to-1 ratio favored advancers.
The S&P 500 posted 23 new 52-week highs and no new lows; the Nasdaq Composite recorded 84 new highs and 51 new lows.
Volume on U.S. exchanges was 10.26 billion shares, compared with the 7.11 billion-share average for the full session over the last 20 trading days.
Separately Reuters reported that a gauge of global stocks climbed on Friday in advance of a meeting on trade between U.S. President Donald Trump and Chinese President Xi Jinping, as global equities notched their best first half since 1997.
Trump and Xi will meet during a Group of 20 summit this weekend in Osaka, Japan, for talks that could help resolve a yearlong trade war between China and the United States, as signs of its dampening effect on global growth have become more prevalent.
"Everybody's anticipating a positive meeting between Trump and President Xi," said Denis (Sandy) Villere, portfolio manager at Villere & Co in New Orleans.
"It's priced in as if it’s a foregone conclusion. It's making us a little nervous that the market's already baked in all that good news."
Economic data on Friday showed U.S. consumer spending increased moderately in May and prices rose slightly, pointing to slowing economic growth and benign inflation pressures, which could give the Federal Reserve enough leeway to cut interest rates in July.
Wall Street rose, buoyed by financial shares in following the results of the U.S. Federal Reserve's "stress tests," although each of the major indexes snapped a three-week winning streak. The S&P 500 had its best June performance since 1955 while the Dow marked its best June since 1938.
The Dow Jones Industrial Average <.DJI> rose 72.84 points, or 0.27%, to 26,599.42, the S&P 500 <.SPX> gained 16.53 points, or 0.57%, to 2,941.45 and the Nasdaq Composite <.IXIC> added 38.49 points, or 0.48%, to 8,006.24.
Banking shares also helped European indexes move higher ahead of the meeting, with Germany's DAX leading the way with a gain of more than 1% thanks to gains in Deutsche Bank AG
The pan-European STOXX 600 index <.STOXX> rose 0.70% to notch its best first half since 1998 and MSCI's gauge of stocks across the globe <.MIWD00000PUS> gained 0.44%.
MSCI's index scored its best month since January, gaining more than 6% in June as equities rallied after major central banks around the globe pivoted towards easier monetary policy stances.
That shift came as trade negotiations between the United States and China broke down earlier this year. Now markets are betting that an interest rate cut by the Federal Reserve of at least a quarter of a percentage point is a virtual certainty as early as the next policy meeting in July, according to CME's FedWatch tool.
On Thursday, China's central bank pledged to support a slowing economy, before the release of data that is expected to show China's factory activity slowed for a second consecutive month in June.
The dollar index <.DXY> fell 0.01% against a basket of major currencies and was set to turn in its weakest monthly performance since January 2018 as anticipation of a Fed rate cut has pushed the index down about 1.7% this month.- Reuters
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