Dow surges 125 points, as U.S. stock indexes touch record intraday highs and eye fourth straight week of gains - MarketWatch

The Dow climbed 125 points Friday, with U.S. 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 U.S. 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, +0.46%  rose 127 points, or 0.5%, at 28,503, the S&P 500 index SPX, +0.58% added 17 points, or 0.5% to 3,222, while the Nasdaq Composite index COMP, +0.45% picked up 37 points, or 0.4%, at 8,925.

All three benchmarks set record intraday highs Friday.

On Thursday, the Dow rose 137.68 points, or 0.5%, to a record 28,376.9 close, while the S&P 500 index gained 14.23 points, or 0.5%, at 3,205.37, its all-time high. The Nasdaq Composite Index  added 59.48 points, a gain of 0.7%, at 8,887.22, 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 500 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 22%, the S&P 500 index up 28.5% and the Nasdaq up 34.5%.

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 U.S. economic data, Americans increased spending in November at the fastest rate in four months, suggesting households 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 2020 is going to be a super year for stocks,” MUFG chief economist Chris Rukey wrote in a note. “The S&P 500 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 U.S. House passed the USMCA bill to replace NAFTA on 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 U.S.-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?

U.S. Steel Corp. X, -10.97%   was down 10.8% after announcing Thursday afternoon that its financial performance will be worse 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, -0.97%  late Thursday reported big jumps in its quarterly profit and sales, but the stock was off 1.4% after hitting a record close of $101.15 on Thursday.

BlackBerry Ltd. BB, +11.19%  share rallied 10.6%, after the Canada-based security software company posted third-quarter revenue growth that beat analyst expectations.

Boeing BA, -1.25%  was off 1% after its new Starliner capsule ran into trouble and went off course in orbit minutes after blasting off Friday on its first test flight, a crucial dress rehearsal for next year’s inaugural launch with astronauts.

How are other markets trading?

The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -0.41%  rose less than a basis point to 1.918%.

Crude oil prices were pulling back, with the value of a barrel of West Texas Intermediate crude for February delivery CLG20, -1.32%  losing 96 cents, or 1.6%, at $60.22. The price of an ounce of gold for February delivery GCG20, -0.18% was down $3.10, or 0.2%, at $1,481.20.

The U.S. dollar was ticking higher, with the ICE US Dollar index DXY, +0.33%  gaining 0.3%.

In Asia overnight, stocks traded mostly lower, with the China CSI 300 000300, -0.25%  falling 0.3%, Japan’s Nikkei 225 NIK, -0.20%  down 0.2% and Hong Kong’s Hang Seng index HSI, +0.25%  rising 0.3%.

In Europe, stocks were mostly higher, as reflected by the Stoxx Europe 600’s SXXP, +0.80%  0.8% rise.

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2019-12-20 18:38:00Z
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