U.S. Stocks Post Fourth Week of Gains Fueled by Earnings, Trade News

The S&P 500 Index and the Dow Jones Industrial Average posted their fourth straight week of gains, their longest since August, capped off by strong performances on Friday that were fueled by potential progress in U.S.-China trade relations.

Although last week started with the focus on corporate earnings, the news primarily responsible for most of the gains were the Chinese government’s efforts to stimulate the domestic economy and reports that China is willing to make an effort to reduce its trade surplus with the United States by trying to speed along the process of achieving a trade deal in a timely manner.

For the week, the benchmark S&P 500 Index settled at 2670.71, up 2.9%. For the year, the index is up 6.5%. The blue chip Dow Jones Industrial Average finished at 24706.35, up 3.0%. It’s up 5.9% for the year. The tech-based NASDAQ Composite closed at 7157.23, up 2.7%. It is up 7.9% in 2019.

China Offers 6-year Import Boost

The catalyst behind the strong gains in the major U.S. stock indexes on Friday was the news that China has offered a six-year boost in imports during its ongoing talks with the U.S., officials familiar with the matter told CNBC.

Bloomberg news said Chinese officials made the offer during negotiations in Beijing earlier in January. Officials also told Bloomberg, which was the first to report on the import boost offer, that China would increase its annual import of U.S. goods by a combined value of over $1 trillion.

Major Indexes Performances

The S&P 500 Index rally was fueled by strong performances in the materials and industrials sectors. Shares of Boeing and Caterpillar both closed more than 1.5 percent higher. Both companies stand to benefit from a U.S.-China trade deal.

The Dow Jones Industrial Average was boosted by gains in UnitedHealth and Home Depot.

The technology-driven NASDAQ Composite lagged the two other major indexes as most investor capital flowed into materials and industrials.

Financial Sector Outperforms

Corporate earnings season kicked-off last week, led by the major banks, including J.P. Morgan Chase, Bank of America, Morgan Stanley and Goldman Sachs, which released their quarterly results. As a result, the financial services sector outperformed the broader market, finishing 6% higher.

Technology Boosted by Netflix

Although technology shares underperformed on Friday, they carried the S&P 500 Index and Dow earlier in the week on the back of Netflix which rose after announcing it was raising its subscription fee 13% to 18%. This helped boost share prices of Facebook, Apple and Alphabet.

So Far This Year…

The S&P 500 Index has now recovered more than half of its losses since September’s peak. Stocks are also up sharply to start the year. In fact, 13 trading days in, it’s the best start to a year for the S&P 500 since 1987, according to Bespoke Group.