U.S. stocks kicked off March on a positive note Friday with sentiment bolstered by news that trade negotiations between the U.S. and China may conclude as soon as in two weeks. However, the latest data on U.S. manufacturing disappointed, tempering investors’ optimism.
How are benchmarks faring?
The Dow Jones Industrial Average DJIA, +0.30%[1] gained 75 points, or 0.3%, to 25,991, while the S&P 500 index SPX, +0.46%[2] rose 12 points, or 0.3%, to 2,796. The Nasdaq Composite Index COMP, +0.64%[3] advanced 43 points, or 0.6%, to 7,576.
The S&P 500 and the Nasdaq are poised to rise for the week at their current pace while the Dow may snap its nine-week winning streak.
What’s driving the market?
Hope of an imminent conclusion to Sino-American trade negotiations in the next couple of weeks was among the factors sparking buying interest.
According to Bloomberg News[4], U.S. officials were preparing for a summit between President Donald Trump and Chinese leader Xi Jinping at which a 150-page agreement could be signed. However, during a news conference while abroad this week, Trump emphasized his willingness to walk away if a favorable trade deal couldn’t be struck.
Earlier this week, top trade negotiator Robert Lighthizer said that tariffs on $200 billion in Chinese goods set to increase to $25% from 10% at 12:01 a.m. March 2, wouldn’t go into effect.
Meanwhile, in the U.K., the opposition Labour Party has confirmed it would support a second referendum on membership of the European Union, while Prime Minister Theresa May has agreed to allow Parliament to delay Brexit, which many analysts say raises the chances that the nation’s withdrawal from the bloc will be put off past the March deadline.
What data are in focus?
The Institute for Supply Management’s manufacturing index fell to 54.2% in February[5], below economists’ expectations of 55.5%, according to a MarketWatch poll. It also marked the slowest pace of growth since the election of President Trump in November 2016
Markit’s manufacturing PMI also disappointed, coming in at 53.0 in February, after hitting 53.7 in January.
The Commerce Department reported that the PCE inflation index rose 0.1% in December, compared with the 0.4% increase in November, above economists estimates of a 0.4% decline, according to a MarketWatch poll. The 12-month change in prices remained steady at 1.9%.
Meanwhile,...