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U.S. Stocks Close Mostly Higher Following Trump Press Conference

wallstreet oct16 29may20 lt

Stocks showed wild swings over the course of the trading day on Friday before eventually ending the session mostly higher. With the upward move, the Nasdaq reached a new three-month closing high and the S&P 500 ended the day at its best closing level since early March.

The major averages moved to the upside late in the session as traders reacted positively to President Donald Trump's highly anticipated press conference about China.

The Dow slipped into the red in the final minutes of trading, edging down 17.53 points or 0.1 percent to 25,383.11, but the broader Nasdaq and the S&P 500 closed firmly positive. The Nasdaq jumped 120.88 points or 1.3 percent to 9,489.87 and the S&P 500 climbed 14.58 points or 0.5 percent to 3,044.31.

For the holiday-shortened week, the Dow spiked by 3.8 percent, the S&P 500 soared by 3 percent and the Nasdaq surged up by 1.8 percent.

Trump lashed out at China in his brief remarks, but traders seemed relieved that he did not announce new tariffs or a withdrawal from the phase one trade agreement.

Following China's recent move to approve a controversial security law for Hong Kong, Trump said he is directing his administration to remove special exemptions for the city.

Trump argued Hong Kong is "no longer sufficiently autonomous" to warrant preferential treatment by the U.S., claiming China has abandoned the idea of "one country, two systems."

The president also announced that he is suspending the entry of certain foreign nationals from China into the U.S. as well as instructing a presidential working group on financial markets to study Chinese companies listed on U.S. exchanges.

Trump also revealed that he is terminating the U.S.' relationship with the World Health Organization, claiming China has total control of the agency.

In U.S. economic news, the Commerce Department released a report unexpectedly showing a substantial increase in U.S. personal income in the month of April, reflecting the distribution of stimulus checks by the federal government.

The Commerce Department said personal income spiked by 10.5 percent in April after tumbling by a revised 2.2 percent in March.

The jump in personal income came as a surprise to economists, who had expected income to plunge by 6.5 percent compared to the 2.0 percent slump originally reported for the previous month.

Meanwhile, the report showed a steep drop in personal spending due to the impact of the coronavirus-induced lockdown.

The Commerce Department said personal spending plummeted by 13.6 percent in April after a revised 6.9 percent slump in March.

Economists had expected spending to tumble by 12.6 percent compared to the 7.5 percent nosedive originally reported for the previous month.

Meanwhile, revised data released by the University of Michigan showed consumer sentiment in the U.S. improved by slightly less initially estimated in the month of May.

The report showed the consumer sentiment index for May was downwardly revised to 72.3 from the preliminary reading of 73.7. Economists had expected the index to be upwardly revised to 74.0.

Despite the unexpected downward revision, the consumer sentiment index is still slightly above the April reading of 71.8.

Sector News

Technology stocks moved sharply higher over the course of the trading session, contributing to the significant advance by the tech-heavy Nasdaq.

Computer hardware and semiconductor stocks posted particularly strong gains, driving the NYSE Arca Computer Hardware Index and the Philadelphia Semiconductor Index up by 2.8 percent and 2.7 percent, respectively.

Notable strength also emerged among healthcare stocks, as reflected by the 1.3 percent gain posted by the Dow Jones U.S. Health Care Index. With the upward move, the index reached its best closing level in over three months.

Pharmaceutical, gold and retail stocks also moved to the upside on the day, while significant weakness was visible among banking and energy stocks

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index edged down by 0.2 percent, while China's Shanghai Composite Index inched up by 0.2 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index plunged by 2.3 percent, the German DAX Index and the French CAC 40 Index slumped by 1.7 percent and 1.6 percent, respectively.

In the bond market, treasuries moved notably higher following the modest drop seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 5.7 basis points to 0.648 percent.

Looking Ahead

The monthly jobs report is likely to attract attention next week, with economists expecting the loss of about 10 million jobs in the month of May.

Traders are also likely to keep an eye on reports on manufacturing and service sector activity, the trade deficit, and weekly jobless claims.

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