The Dow climbed 137 points Friday, with US stock indexes setting record highs again intraday, during a ‘quadruple-witching session’ that will see the expiration of December stock options, along with stock index futures and options.
Investors also were digesting an update on third-quarter US GDP growth that showed strong consumer spending was offset by weaker business investment in inventories, while in the fourth quarter consumer spending climbed at its fastest pace in four months in November.
What are stock indexes doing?
The Dow Jones Industrial Average DJIA, 0. (********************************************************************************************************% rose points, or 0.5%, at (****************************************************************************************************************, 728, the S&P index SPX, 0. % added points, or 0.5% to 3, (*******************************************************************************************, while the Nasdaq Composite index COMP, 0. 42% picked up points, or 0.4%, at 8, 2020.
All three benchmarks set record intraday highs Friday.
On Thursday, the Dow rose (**********************************************************************************************. 96 points, or 0.5%, to a record (********************************************************************************************************, .9 close, while the S&P (index gained) **************************************************************************************************************************. points, or 0.5%, at 3,**********************************************************************************, its all-time high. The Nasdaq Composite Index added (**********************************************************************************************************. points, a gain of 0.7%, at 8, (********************************************************************************************************************, extending its seventh-day winning streak and setting another record.
For the week, the Dow is on pace to gain 1.3%, the S&P 600 is poised for a 1.7% return, while the Nasdaq Composite is on track for a 2.1% weekly advance.
Year-to-date the Dow is now up (********************************************************************************************************************%, the S&P (index up) . 5% and the Nasdaq up. 5%.
What’s driving the market?
The Commerce Department’s third estimate of third-quarter GDP, published Friday, left growth unchanged 2.1%,with strong consumer spending offset by weaker business investment in inventories.
In other US economic data,Americans increased spending in Novemberat the fastest rate in four months, suggesting homes still have plenty of buying power to keep the economy growing at a steady pace through the holiday shopping season.
“Overall, the bottom line is that the economic numbers keep coming in strong,” Joe Saluzzi, partner , co-head of Equity Trading at Themis Trading told MarketWatch. “I think a lot of people might not have been positioned for this.”
Congress also passed spending bills Thursday to avoid a partial government shutdown and the White House confirmed President Trump would sign the bills.
“If the economy is not rolling over and going into a recession ditch, and tame core consumer inflation is low at 1.6 percent, you can bet your bottom dollar, the Federal Reserve is going to keep enough punch in the punch bowl to make sure that is going to be a super year for stocks, ”MUFG chief economist Chris Rukey wrote in a note. “The S&P is paying more in dividends than the Federal Reserve is paying on cash. ”
Wall Street sentiment also remains supported by progress on international trade policy, after the USHouse passed the USMCA bill to replace NAFTAon Thursday and the U.S. and China agreed on a partial deal last Friday. On Friday, President Donald Trump said he had a“very good talk”with Chinese Leader Xi Jinping and that a formal signing of a partial US-china trade deal is being arranged. U.S. Treasury Secretary Steven Mnuchin said Thursday that the pact would be signed in early January.
“This is a boost to Mr. Trump, who considers it to be his signature trade deal, and reduces one source of uncertainty for firms, but it is dominated by the ongoing uncertainty over US-China trade talks, ”wrote analysts at UniCredit, in a Friday research note.
Investors continue to shake off Wednesday’s impeachment vote by the Democratic Party controlled House, amid expectations that the Republican-controlled Senate will vote against removing Trump and House Speaker Nancy Pelosi on Tuesday threatened to delay submitting the articles of impeachment to the Senate.
Separately, quadruple witching day, the four-pronged expiration of stock options and stock-index futures and options tends to contribute some increased volume in the latter portion of the trading day. It comes during a year-end holiday period where banks aim to shore up their capital to comply with regulatory requirements, which could conversely, deflate volumes over the last several days of the year.
Which stocks are in focus?
US Steel Corp X ,–******************************************************************************************** (%)******** was down 15. 8% after announcing Thursday afternoon that its financial performance will beworse than expected in the fourth quarter,and the company plans to slash its dividend, suspend stock repurchases, lay off workers and suspend some operations.
Nike Inc. NKE,– 1. (%) late Thursdayreported big jumps in its quarterly profit and sales, but the stock was off 1.4% after hitting a record close of $************************************************************************************** on Thursday.
BlackBerry Ltd. ************************ (BB, 14. (**********************************************************************************************************%********** share rallied (********************************************************************************************************************************. 6%, after the Canada-based security software company (posted third-quarter revenue growththat beat analyst expectations.)
Boeing ************** (BA,– 1.) ****************************************************************************************************** (%) ********** was off 1% after its new Starliner capsule ran into troubleand went off course in orbit minutes after blasting off Friday on its first test flight, a crucial dress rehearsal for next year inaugural launch with astronauts.
How are other markets trading?
The yield on the 14 – year US Treasury note ********************** TMUBMUSD 12 Y,– 0. (%) rose less than a basis point to 1. (%).
(Crude oil prices) ************************** were pulling back, with the value of a barrel of West Texas Intermediate crude for February delivery ******************** CLG ,– 1. (% losing 96 cents, or 1.6%, at $ (********************************************************************************************************************. The price of an ounce of gold for February delivery (*************************************** (GCG) ,– 0. (%) was down $ 3. 12, or 0.2%, at $ 1, (**************************************************************************************. .
The US dollar was ticking higher, with the ICE US Dollar index DXY, ******** ( 0.) ************************************************************************************************************ (%) gaining 0.3%.
In Asia overnight, stocks traded mostly lower, with the China CSI (***************************************************************************************** (000) ***************************************************************************************,– 0. falling 0.3%, Japan’s Nikkei (***************************************************************************************** (************************************* (NIK,) – 0. (************************************************************************************************************************% down 0.2% and Hong Kong’s Hang Seng index (************************************************ (HSI, 0.) ******************************************************************************************************************% rising 0.3%.
In Europe, stockswere mostly higher, as reflected by the Stoxx Europe 728 s SXXP, 0. 0.8% rise.
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