Stocks climb, investors brace for trade talks
Stocks rose Friday as investors await a meeting between President Donald Trump and China’s President Xi Jinping, which will help shed light on the direction of future trade policy.
The S&P 500 (^GSPC) rose 0.82%, or 22.4 points, as of market close Friday, capping off the biggest weekly gain for the index since December 2011. The Dow (^DJI) advanced 0.79%, or 199.62 points, while the Nasdaq (^IXIC) rose 0.79%, or 57.45 points.
Crude oil posted its biggest monthly loss since October 2008 on Friday, with prices slumping more than 20% in November. U.S. West Texas intermediate (CL=F) crude prices settled lower by 1% on Friday to $50.93 per barrel. Prices have sunk more than 30% since rallying to four-year highs in early October amid ongoing concerns of oversupply and a global economic slowdown. Brent crude (BZ=F), the international benchmark, settled lower by 1.3% to $58.71 per barrel on Friday, or down about 22% in November.
The three major U.S. equity indices were positive for November after being whipsawed this week. Stocks swelled Wednesday after markets took comments from Federal Reserve Chairman Jerome Powell to signal a more tempered approach to future rate hikes, sending the Dow higher by more than 600 points. But investor enthusiasm cooled Thursday as the G20 summit between world leaders in Argentina began and uncertainty over trade brewed.
Trump and Xi plan to meet over dinner on Saturday amid an escalating trade war between the U.S. and China. U.S. Trade Representative Robert Lighthizer told reporters in Buenos Aires on Friday that he “would be very surprised if the dinner was not a success,” sending stock futures slightly higher during early trading. Trump has previously threatened to bump up the current 10% rate of tariffs on $200 billion worth of Chinese imports to 25% at the start of next year and add levies on the remaining $267 billion of goods not currently subject to tariffs if the trade talks do not produce a fair agreement.
But despite Lighthizer’s remarks and Trump’s comments on Thursday that he was “close to doing something” with China on trade, many are skeptical the meeting will produce a meaningful trade deal. Tariffs, and the threat of additional levies, have been used as a negotiation tactic as Trump attempts to push China to end practices of alleged forced technology transfers and intellectual property threat.
“The president is at his heart a protectionist and he was reminding the Chinese he doesn’t mind the idea of tariffs,” American Enterprise Institute economist Derrick Scissors told Yahoo Finance’s Zack Guzman. “But there are a lot of moving parts … and on the fundamental things we want from the Chinese there’s just no give at all. The idea we’d get a meaningful deal is wishful thinking.”
Others have noted that the strength of the U.S. economy may give Trump the upper hand when it comes to upping the ante on tariffs. On Friday, China’s Purchasing Managers’ Index data pointed to worsening in the country’s manufacturing sector in November, providing another sign of economic slowdown in the midst of the dragged-out trade tensions.
U.S.-China tensions aside, the G20 did provide the backdrop for the inking of one major trade deal. On Friday, President Donald Trump, Canadian Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto signed the U.S. Mexico Canada Agreement (USMCA) in Buenos Aires. The deal was previously announced more than a month ago and followed months of negotiations between the three countries.
STOCKS: Apple loses title as most valuable publicly traded U.S. company
Microsoft (MSFT) surpassed Apple (AAPL) as the most valuable publicly traded U.S. company as of market close on Friday. Microsoft carried an implied market valuation of $851.2 billion as of the end of trading Friday, exceeding Apple’s market valuation of $847.4 billion, CNBC reported. The Redmond, Washington-based company’s market cap briefly surpassed Apple’s multiple times during intraday trading throughout the week. Shares of Apple were down 0.54% to $178.58 each as of market close, while shares of Microsoft rose 0.64% to $110.89 each.
Marriott International (MAR) said in a statement on Friday that hackers had access to its Starwood guest reservation database since 2014, potentially exposing the data of 500 million guests. For about 327 million individuals, the information included their name, mailing address, phone number, email and passport number. The hotel chain, which bought Starwood in 2016, said it learned about the breach after an internal security tool sent an alert in September. Shares of Marriott slid 5.59% to $115.03 each as of market close on Friday.
General Electric (GE) shares fell following a price target cut from Deutsche Bank analyst Nicole DeBlase. DeBlase lowered the price target on the stock to $7 from $11, well below the average price target of $11.38 among analysts polled by Bloomberg. She cited factors including macroeconomic conditions for her reasoning behind the lowered price target, noting that GE will likely be able to build its balance sheet next year with cash flow from its industrial unit as long as economic conditions and GE’s debt do not worsen in the next few years. Deutsche Bank maintains a Hold rating on the stock. Shares of GE fell 5.5% to $7.50 each as of market close Friday.
GameStop (GME) cut its guidance for full-year 2018 earnings, pointing to expected weakness in the game store chain’s key holiday season. The company now expects as much as an adjusted $2.75 per share this fiscal year, while its previous highest forecast had been for as much as $3.35 per share. Rob Lloyd, GameStop’s COO and CFO, attributed the lower forecast to weakness in some titles and used games. However, GameStop beat expectations in the third quarter, reporting adjusted earnings of 67 cents per share on $2.08 in sales, topping consensus estimates of 57 cents per share on revenue of $2.03 billion. Shares of GameStop fell 6.63% to $13.66 each as of market close.
Workday (WDAY) shares surged after the company beat Wall Street’s expectations on the top and bottom lines in quarterly results. The cloud-based human resource software provider delivered earnings of 31 cents per share, more than double consensus expectations of 15 cents, according to Bloomberg data. Quarterly revenue also topped consensus estimates, coming in at $743.2 million versus $723 million expected. Subscription services revenue grew 35% in the third quarter to $624.4 million, and the company expects that subscription revenue will grow 33% to as much as $2.38 billion in fiscal 2019. Shares of Workday rose 12.9% to $164 each as of market close.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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