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Upbeat Comments About Trade Talks Drive U.S. Stocks To Record Highs

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Following the lackluster performance seen over the past several sessions, stocks showed a strong move to the upside during trading on Friday. With the upward move on the day, the major averages all reached new record highs.

The major averages saw continued strength going into the close, ending the session at their best levels of the day. The Dow jumped 222.93 points or 0.8 percent to 28,004.89, the Nasdaq climbed 61.81 points or 0.7 percent to 8,540.83 and the S&P 500 advanced 23.83 points or 0.8 percent to 3,120.46.

For the week, the Dow surged up by 1.2 percent, while the Nasdaq and the S&P 500 climbed by 0.8 percent and 0.9 percent, respectively.

The strength on Wall Street came amid renewed optimism about a U.S.-China trade deal following comments from White House officials.

White House economic adviser Larry Kudlow said Thursday that U.S. and Chinese negotiators are in contact every single day and are "getting close" to a phase one trade deal.

"It's not done yet, but there has been very good progress and the talks have been very constructive," Kudlow said at an event at the Council on Foreign Relations.

In an appearance on the Fox Business Network on Friday, Commerce Secretary Wilbur Ross said the talks are "down to the last details" and a deal will be completed "in all likelihood."

Adding to the positive sentiment, China has lifted a nearly five-year ban on imports of U.S. poultry in a goodwill gesture that could lead to more than $1 billion in annual shipments to China.

Traders also reacted positively to a report from the Commerce Department showing U.S. retail sales rebounded by slightly more than expected in the month of October.

The Commerce Department said retail sales climbed by 0.3 percent in October, reversing the 0.3 percent drop in September. Economists had expected retail sales to rise by 0.2 percent.

Excluding a rebound in auto sales, the report said retail sales rose by 0.2 percent in October after edging down by 0.1 percent in September. Ex-auto sales had been expected to increase by 0.4 percent.

Meanwhile, traders shrugged off a report from the Federal Reserve showing a steep drop in industrial production in October, as the decrease was partly due to the since-resolved strike at General Motors (GM).

Sector News

Healthcare stocks turned in some of the market's best performances on the day, resulting in a 2.2 percent jump by the Dow Jones U.S. Health Care Index. The index ended the session at a new record closing high.

Significant strength was also visible among biotechnology stocks, as reflected by the 2 percent gain posted by the NYSE Arca Biotechnology Index. The advance lifted the index to its best closing level in over three months.

Oil service stocks also saw considerable strength on the day, driving the Philadelphia Oil Service Index up by 1.9 percent.

The strength among oil service stocks came amid a notable increase by the price of crude oil, with crude for December delivery jumping $0.95 to $57.72 a barrel.

Natural gas, steel, pharmaceutical and computer hardware stocks also turned in strong performances amid broad based buying interest.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday, although Chinese stocks bucked the uptrend. Japan's Nikkei 225 Index climbed by 0.7 percent, while Australia's S&P/ASX 200 Index advanced by 0.9 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index inched up by 0.1 percent, the German DAX Index rose by 0.5 percent and the French CAC 40 Index climbed by 0.7 percent.

In the bond market, treasuries gave back ground are moving notably higher over the past few days. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.9 basis points to 1.834 percent.

Looking Ahead

News on the trade front is likely to remain in focus next week, although traders are also likely to keep an eye on reports on homebuilder confidence, housing starts, and existing home sales as well as the minutes of the latest Federal Reserve meeting.

On the earnings front, retail giants Home Depot (HD), Lowe's (LOW), Target (TGT), Macy's (M), and Gap (GPS), are among the companies due to report their quarterly results next week.

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