The S&P 500 hits a record for notching five straight weeks of winnings
The stock market capped another week of healthy gains on Friday, but it ended in more of a confused patch than a bang as confusion over the US-China trade war hung over the market.
Stocks fluctuated between small gains and losses throughout the day amid conflicting signals about the progress being made by US and Chinese traders. President Donald Trump said he has not agreed to roll back any tariffs, just a day after a Chinese official said the two sides had agreed to do just that if the talks continue.
Stocks and bond yields dipped immediately after Trump told reporters at the White House, "I didn't say anything." But after flipping through the day, the S&P 500 turned higher during the last hour of trading and closed at a record 3,093.08, up 7.90, or 0.3%.
It is the fifth straight week of index gains, which corresponds to the longest winning series of the last two years.
Record rally: Will the beef market end? How Stocks Perform in Election Years
Not so creepy: Stocks escaped a scary October. So what's next for your 401 (k)?
The Dow Jones Industrial Average increased by 6.44 points, or less than 0.1%, to 27,681.24, and the Nasdaq composite gained 40.80, or 0.5%, to 8,475.31.
The general tone of the market will continue to be very cautiously optimistic, "said JJ Kinahan, chief market strategist at TD Ameritrade.
Even with the conflicting signals of the trade war, momentum has seemed to be towards a stopgap deal Wall Street only hopes it will prevent the trade war from worsening: Another round of Chinese goods is scheduled to begin next month, with investors not expecting a good deal soon that will solve all the problems between the world's two largest economies.
meanwhile, it has been encouraging lately and shows that the labor market is still strong, interest rates are low after three cuts from the Federal Reserve, and corporate profits have not been as bad as Wall Street feared.
Rising confidence can not only be found in record high stock prices, but also in a sharp increase in Treasury yields. When investors feel less need for security, they sell government and as government rates fall, their returns increase.
The 10-year government bond climbed to 1.94% from 1.92% late Thursday and from a low of 1.50% just last month.
Not only is the return on the rise, the same is the gap between short-term and long-term treasuries. It is seen as a vote of confidence in the economy of the bond market, which means that a carefully followed warning bell on the recession has remained silent.
The 10-year government rate fell below the two-year rate in late August and early September. It's a relatively rare thing, and it's often correctly predicted the recession in the past, although it doesn't have a perfect record.
However, since the summer, the optimism in the economy and the odds of a US-China trade increased. has turned the yield curve back to normal. The gap between the two and ten year long Treasurys is back to its healthiest level since July.
Confidence may have been so high lately that stock prices have become too expensive, says George Young, portfolio manager at Villere & Co. [19659002] He sees so few stocks attractively priced that he now has 15% of his clients' money in mutual funds and a separately managed cash-settled account. In June, when the worries about the economy and the trade war were higher, Young had given only 5% in cash to the many available purchases.
"I don't mean to be negative on the market," Young said, "but when stocks go ahead, it's up to me to balance in the long run."
Walt Disney jumped 3.8% for one of the biggest gains in the S&P 500 after it reported stronger profits for the last quarter than Wall Street expected, in part thanks to the films "Toy Story 4" and "The Lion King." The company also received a positive response from a test of its planned streaming service, Disney Plus.
At the losing end was Gap, which sank 7.6% for the biggest loss in the S&P 500 after the retailer cut its profit forecast for the year, and also announced the resignation of CEO Art Peck. [19659022]
