The Dow Jones Industrial Average gained over 250 points on Friday as investor optimism regarding a U.S.-China trade deal and a resolution for the ongoing government shutdown lifted the markets.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEARCA: SPY), iShares Core S&P 500 ETF (NYSEARCA: IVV) and Vanguard 500 Index (NYSEARCA: VOO), were 1.2% higher Friday.
On Thursday, U.S. President Donald Trump said that if Republican Senate Majority Leader Mitch McConnell and Senate Democratic leader Chuck Schumer reached an agreement to end the shutdown, it would have his backing.
Investors are still waiting for a permanent U.S.-China trade deal to come into fruition. However, Commerce Secretary Wilbur Ross said that trade negotiations with China were a long way from completion.
“We would like to make a deal but it has to be a deal that will work for both parties,” said Ross. “We’re miles and miles from getting a resolution.”
Semiconductors are riding high on a positive spate of fourth-quarter earnings reports. Even industry leader Intel’s miss on revenue and a weak guidance following the close of Thursday’s session couldn’t affect the markets.
Intel Earnings
Intel shares fell as much as 8 percent after hours on Thursday after the chipmaker reported lower-than-expected revenue for the fiscal fourth quarter. Earnings came in at $1.28 per share as opposed to the. $1.22 per share expected by analysts, according to Refinitiv.
Furthermore, revenue came in at $18.66 billion, falling below the $19.01 billion expected by analysts. Intel is also searching for new leadership after former CEO Brian Krzanich was ousted seven months ago.
“While it’s still early, it’s fair to say that this earnings season is so far turning out to be better-than-expected,” wrote Tom Essaye, president of the Sevens Report, in an Friday morning note to clients.
“Like the recent bounce in economic data, the net effect of [this]earnings season isn’t to provide an upside catalyst in stocks (results and data need to be better), but instead to solidify support at the lower end of the 2,550-2,720ish trading range,” he added.
IMF Cuts Global Growth Forecast
Investors on Friday also looked past fears of a global economic slowdown. Earlier this week, the International Monetary Fund lowered its global growth forecast, pointing to ongoing trade wars dampening China’s economic outlook as well as rising interest rates in the United States.
“Higher trade uncertainty will further dampen investment and disrupt global supply chains,” said IMF chief economist Gita Gopinath.
The IMF trimmed its growth expectations to 3.5 percent from 3.7 percent. Global growth outlook for 2020 was also cut to 3.6 percent from 3.7 percent.
“After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising,” said IMF Managing Director Christine Lagarde who presented the latest forecasts during the World Economic Forum in Davos, Switzerland.
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