Stocks tick higher, but trade wor­ries stop an early rally

Daily Local News (West Chester, PA) - - BUSINESS - By Mar­ley Jay AP Mar­kets Writer

NEW YORK » U.S. stocks fin­ished mostly higher Fri­day, but they sur­ren­dered most of an early gain as wor­ries about ris­ing tar­iffs once again damp­ened in­vestors’ en­thu­si­asm as the sec­ond quar­ter came to an end.

The Fed­eral Re­serve al­lowed most of the largest fi­nan­cial in­sti­tu­tions in the U.S. to pay big­ger div­i­dends to share­hold­ers and buy back tens of bil­lions of dol­lars in stock. Wells Fargo made its big­gest gain since shortly after the 2016 Pres­i­den­tial elec­tion. Nike had its big­gest surge in al­most four years after it said sales in North Amer­ica im­proved in its lat­est quar­ter.

The Com­merce De­part­ment said spend­ing by con­sumers rose a dis­ap­point­ing 0.2 per­cent in May. But wages con­tin­ued to im­prove, and Shawn Cruz, man­ager of trader strat­egy for TD Amer­i­trade, said that sug­gests spend­ing will rise.

“In­vestors wanted to see what the po­ten­tial is for con­sumer spend­ing in the fu­ture,” Cruz said. “Wage growth came in solid enough that there wasn’t a ma­jor con­cern.”

The S&P 500 in­dex edged up 2.06 points, or 0.1 per­cent, to 2,718.37. The Dow Jones In­dus­trial Av­er­age gained 55.36 points, or 0.2 per­cent, to 24,271.41. The Nas­daq com­pos­ite rose 6.62 points, or 0.1 per­cent, to 7,510.30. The Rus­sell 2000 in­dex of smaller-com­pany stocks lost 1.95 points, or 0.1 per­cent, to 1,643.07.

Just be­fore mid­day the Dow rose as much as 293 points, but those gains eroded as in­vestors again fo­cused on the trade con­cerns that have rocked the mar­ket since late Fe­bru­ary. Canada an­nounced $12.6 bil­lion in re­tal­ia­tory tar­iffs on U.S. goods in re­sponse to the U.S. tar­iffs on steel and alu­minum im­ports. Gen-

eral Mo­tors warned that if the Trump ad­min­is­tra­tion places im­port taxes on cars and car parts, it will likely face re­tal­i­a­tion and might have to elim­i­nate jobs in the U.S.

The Fed­eral Re­serve al­lowed 32 of the 35 largest banks in the U.S. to raise their quar­terly div­i­dends and buy back more stock. The cen­tral bank de­ter­mined that those in­sti­tu­tions are in good enough fi­nan­cial shape to weather a ma­jor down­turn in the econ­omy.

Wells Fargo gained 3.4 per­cent to $55.44. While the Fed’s “stress tests” mea­sure a bank’s fi­nan­cial health and are sep­a­rate from its busi­ness tac­tics, in­vestors felt the Fed’s ap­proval was a no­table win for Wells. Ear­lier this year the Fed or­dered the bank to re­place sev­eral of its di­rec­tors and lim­ited its growth in re­sponse to abu­sive prac­tices in­clud­ing open­ing ac­counts in con­sumers’ names with­out per­mis­sion. Those ac­tions duped con­sumers out of mil­lions of dol­lars.

Wells Fargo ad­mit­ted to those prac­tices in 2016 and has since agreed to pay more than $1.5 bil­lion in fines, penal­ties and le­gal set­tle­ments.

Nike said rev­enue in North Amer­ica grew after sev­eral quar­ters of de­clines, and its fourth-quar­ter profit and sales blew past Wall Street fore­casts. The ath­letic ap­parel com­pany also said it will buy back $15 bil­lion in stock over the next four years. It gained 11.1 per­cent to $79.68.

With trade ten­sions in fo­cus through­out the sec­ond quar­ter, stocks didn’t make big gains after a very strong round of first-quar­ter cor­po­rate re­ports. The S&P 500 rose 2.9 per­cent over those three months and the Dow added just 0.7 per­cent.

In­vestors felt tech­nol­ogy com­pa­nies and smaller, more U.S.-fo­cused com­pa­nies were safe picks in case the trade ten­sions get worse. The Nas­daq com­pos­ite jumped 6.3 per­cent and the Rus­sell 2000 in­dex ad­vanced 7.4 per­cent. Both set records as re­cently as last week.

Only a week re­mains be­fore the U.S. and China each place tar­iffs on tens of bil­lions of dol­lars in im­ports. Cruz, of TD Amer­i­trade, said the out­come of the broader trade ten­sions will help de­ter­mine what stocks do in the months to come: he said stocks might set more records if the sit­u­a­tion is re­solved in a way the mar­ket likes, but if the ten­sions end up hurt­ing global eco­nomic growth, stocks could fall fur­ther.

En­ergy com­pa­nies and oil prices con­tin­ued to climb. Bench­mark U.S. crude gained 1 per­cent to $74.15 a bar­rel in New York and rose 14 per­cent dur­ing the sec­ond quar­ter, to its high­est price since late 2014. The S&P 500 in­dex of en­ergy com­pa­nies climbed al­most 13 per­cent this quar­ter, far bet­ter than the rest of the mar­ket and its big­gest gain in six and a half years.

Brent crude, used to price in­ter­na­tional oils, rose 1.9 per­cent to $79.44 a bar­rel in Lon­don.

Whole­sale gaso­line climbed 2.2 per­cent to $2.18 a gal­lon. Heat­ing oil jumped 1.4 per­cent to $2.21 a gal­lon. Nat­u­ral gas lost 0.5 per­cent to $2.92 per 1,000 cu­bic feet.

Bond prices wob­bled and turned lower. The yield on the 10-year Trea­sury note rose to 2.86 per­cent from 2.84 per­cent.

Gold added 0.3 per­cent to $1,254.50 an ounce. Sil­ver gained 1 per­cent to $16.20 an ounce. Cop­per fell 0.2 per­cent to $2.97 a pound.

The dol­lar rose to 110.85 yen from 110.64 yen. The euro rose to $1.1672 from $1.1555.

France’s CAC 40 gained 1.1 per­cent and the Ger­man DAX added 0.9 per­cent after a deal on mi­gra­tion re­lieved pres­sure on the coali­tion govern­ment of Chan­cel­lor An­gela Merkel. Bri­tain’s FTSE 100 added 0.3 per­cent.


A pedes­trian passes the New York Stock Ex­change.

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