The Dow Jones Industrial Average rose over 150 points, while the S&P 500 gained 0.8 percent and the Nasdaq Composite rose 0.6 percent Friday on news that U.S.-China trade negotiations are making progress.
China purportedly offered to fix the trade imbalance with the United States by increasing purchases of U.S. goods, according to a Bloomberg News report. Per the report, China offered to increase its annual import of U.S. goods by over $1 trillion.
“That’s the key factor,” said Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research. “If we don’t get that issue resolved, the market going to hit upside headwinds no matter what happens.”
“If we get that issue out of the way, which will boost business and consumer confidence, there is still plenty of room for the market to do really well,” added Frederick.
Banks Kick Off Fourth-Quarter Earnings
It’s been a solid week for the big names in the financial sector. Citigroup reported stronger-than-expected earnings with $1.61 in profit per share, besting Wall Street expectations of $1.55 per share.
Goldman Sachs generated $6.04 per share in profit for the fourth quarter of 2018, versus the $4.45 per share estimate of analysts surveyed by data company Refinitiv. The investment bank also posted revenue of $8.08 billion, beating estimates of $7.55 billion.
Bank of America’s earnings came in at 73 cents per share, beating the 63 cents expected. Revenue was $22.7 billion versus initial estimates of $22.397 billion.
Wells Fargo & Co. finished 2018 by posting a net income of nearly $6.1 billion, or $1.21 in diluted earnings per share.
Morgan Stanley missed on earnings with a profit of 80 cents per share, falling below the 89 cent average estimate of analysts surveyed by Refinitiv. In addition, Morgan Stanley reported that revenue declined 10 percent to $8.55 billion as opposed to the $9.3 billion estimate.
Netflix Misses on Revenue
The technology sector that was beaten down as a result of 2018’s year-end volatility got a boost with Netflix reporting better-than-expected earnings, but missing slightly on revenue. The streaming video company reported an earnings per share of 30 cents versus the 24 cents forecasted by Refinitiv, but $4.19 billion in revenue as opposed to the $4.21 billion expected.
“You know for 20 years we’ve been trying to please our members, and it’s really the same focus year after year,” said Netflix CEO Reed Hastings. “We’ve got all these ways to try to figure out which shows work best, which product features work best. It’s the same virtuous cycle: Improve the service for our members, we grow, that gives us more money to invest.”
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