The Market Sum | Insight after the bell Friday's Headlines 1. What to Expect for the Markets Next Week | | | | INV Anxiety Index
103.21
High | | US 10-Yr Yield
2.655
-1.23% | | | | | | Russell 2000
1,590.06
+17.91% | | | US 10-Yr Yield
2.655
-1.04% | | | | source: Fred Dufour / AFP Getty Images Stocks Lifted by U.S.-China Trade Optimism
Stocks rose once again on Friday to reach a new year-to-date high after Thursday's wobble. The S&P 500 has now closely approached the early December high that preceded the massive market drop late last year. Helping to boost the markets on Friday was increased investor confidence surrounding U.S.-China trade talks.
Big names in tech stocks advanced sharply - including Facebook, Apple, Amazon.com, Netflix, and Alphabet (the FAANG stocks) - further pulling up the Nasdaq Composite, S&P 500, and DJIA alike. All three of these stock indexes have now been positive for the first 8 weeks of the year (9 weeks if you include the last week of December) - truly a rare feat.
Trump and Xi Slated to Meet at Mar-a-Lago
U.S. President Trump and Chinese President Xi are reportedly planning to meet for a trade summit at Mar-a-Lago in late March. Clearly, the 90-day ceasefire deadline (March 1) between the two countries will most likely be delayed, as Trump has hinted on several occasions, until such a summit takes place. The Trump-Xi talks are of critical importance, mainly because of their broad-ranging potential implications on global economic growth.
Kraft-Heinz Sputters
While the major stock indexes were all in the green on Friday, Kraft-Heinz (KHC) investors had different thoughts. The stock dropped around 28% to a multi-year low Friday on a highly disappointing earnings release after Thursday's market close. Not only did the company fall far short of 4th-quarter revenue and earnings estimates, but it also disclosed an SEC investigation into its accounting practices, cut its quarterly dividend by 36%, and also slashed the value of its iconic Oscar Mayer and Kraft brands. Needless to say, it was a lot to stomach for investors. Here's a chart of the precipitous drop in KHC stock:  Wayfair Surges to Hit Record High
On a brighter note, online e-commerce company Wayfair Inc. (W) shot up nearly 30% to an all-time high after the company reported better-than-expected 4th-quarter revenue and earnings. Wayfair also provided better-than-expected guidance for the first quarter. Here's a chart of the big gap and surge for Wayfair's stock:  Gold Retains Its Luster as Interest Rates Fall
As for other key markets on Friday, the price of gold remained elevated, having just hit a new 10-month high this past week. Helping to drive gold's surge since August have been expectations of a slower pace of rate hikes from the Federal Reserve. In fact, as we learned more this week, the Fed will be "patient" and likely keep interest rates on hold for the foreseeable future. Speaking of interest rates, the yield on the 10-year U.S. Treasury note has continued to fall as the Fed has become increasingly dovish. It's hard to fathom that the 10-year yield has dropped from above 3.20% in November to its current level around 2.65%.
What to Expect in the Week Ahead: U.S.-China Negotiations, Economic Data, Earnings Wind-Down, Buffett Letter
As touched on above, developments in U.S.-China trade negotiations have mostly been positive for markets lately, as it's clear that both Trump and Xi are willing to do what it takes to make a deal work - however long that may take. As long as this continues to be the case, upcoming developments in negotiations are more likely to be bullish than bearish for stocks, especially as the newly proposed Mar-a-Lago summit potentially draws closer.
The economy, both global and domestic, has been a source of concern recently. The Fed is clearly worried about economic growth, and on Thursday we received some less-than-encouraging economic data. In the week ahead, three key economic releases will include U.S. consumer confidence on Tuesday, U.S. gross domestic product on Thursday, and U.S. ISM Manufacturing PMI on Friday. In addition, Fed Chair Jerome Powell will be testifying before Congress on the Semiannual Monetary Policy Report. This could be a key market mover on both Tuesday and Wednesday, especially if Powell expresses more concerns over economic growth.
Earnings season is finally winding down, but there are still some major companies that will be reporting. These will include Home Depot (HD), Best Buy (BBY), Campbell Soup (CPB), Lowe's Companies (LOW), HP (HPQ), Square (SQ), Dell Technologies (DELL), Keurig Dr. Pepper (KDP), and several more.
Finally, Warren Buffett will be issuing the annual report for Berkshire Hathaway shareholders this Saturday. For many years, investors have strived to "invest like Buffett." Berkshire Hathaway's annual report is one way to do just that. The report will feature changes and additions to Buffett's portfolio holdings, including many major changes made in 2018. Aside from these changes, the annual report will likely also address Buffett's successor as well as his views on the markets and economy. Overall, this will make for some compelling reading for investors wanting to learn more from the Oracle of Omaha. Enjoy the Market Sum? Share it with a friend. CONNECT WITH INVESTOPEDIA |
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