Wall Street rises as investors eye Fed decision; summit fears ebb
NEW YORK — US stock indexes closed higher on Friday as investors shrugged off concerns about global trade tensions but trading volume was relatively light ahead of a busy week of central bank meetings.
The S&P 500 stayed in positive territory in the afternoon after reversing losses in the early afternoon with its biggest boosts coming from the health care and consumer staples sectors.
Investors appeared to put aside worries about US relations with its biggest trading partners. Group of Seven ( G7) major nations started what was expected to be a tense meeting after US President Donald Trump’s decision to impose tariffs on steel and aluminum imports from Canada, the European Union and Mexico.
Expectations for any breakthroughs at the two-day meeting in La Malbaie, Quebec, were low. “It’s highly unlikely there will be a final communique,” a G7 official said on condition of anonymity.
But some investors appeared hesitant ahead of US and European central bank meetings and the June 12 North Korea-US summit.
“There’s a lot for investors to digest but when you parse through the noise there’s still a lot of strength in the economy and that’s what investors keep gravitating to,” said Carol Schleif, Deputy Chief Investment Officer, Abbot Downing in Minneapolis.
Specifically investors were focused on expectations for strong growth among US corporations, according to Katrina Lamb, head of investment strategy and research at MV Financial, in Bethesda, Maryland. She cited expectations for sales growth of more than 7% this year. Wall Street estimates 2018 earnings growth of 22.2%, according to Thomson Reuters I/B/E/S. “The math looks really good in terms of the relation between price and earnings and sales,” said Ms. Lamb. “This is a perfectly good time to be long the market.”
The Dow Jones Industrial Average rose 75.12 points or 0.30% to 25,316.53; the S&P 500 gained 8.66 points or 0.31% to 2,779.98; and the Nasdaq Composite added 10.44 points or 0.14% to 7,645.51.
For the week, the S& P rose 1.62% while the Dow added 2.76% and the Nasdaq gained 1.21%.
The consumer staples index was the biggest percentage gainer of the S& P’s 11 major sectors, with a 1.3% advance. Its biggest drivers were Procter & Gamble which continued its rally from the previous day, rising 1.9%, and Philip Morris, which rose 2.6% after it announced a 6.5% dividend hike.
The health care index was the S& P’s boost with a 0.70% gain and its biggest driver was Allergan, which rose 4.3%.
The technology sector was barely positive with a 0.03% gain. Dragging on the sector was Apple, Inc. and its suppliers which were down following a report that the iPhone maker was planning to produce fewer phones this year. Apple was last down 1%.
In the quietest trading day since May 25, 6.05 billion shares changed hands on US exchanges on Friday, compared to the 6.6 billion average for the last 20 days.
The Federal Reserve is widely expected to announce an increase interest rates in its post-meeting statement on Wednesday and investors will be watching for signals from the US central bank on its plans for the rest of the year.
US investors are also keeping an eye on Europe as the European Central Bank’s chief economist has said policy makers meeting on June 14 will debate whether to end bond purchases this year. —