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After The Close - Stocks edged higher on Friday, with the major averages closing at record highs, even as some unfavorable trade news kept a lid on sentiment.

The market opened Friday relatively flat, pausing after an impressive run that lifted the Dow Jones Industrial Average and the S&P 500 to all-time highs yesterday.

Stocks then hit a speed bump shortly before 10:00 A.M. EST when word came from the White House that there was no agreement to roll back tariffs on China.

Optimism that trade talks between the U.S. and China were progressing has been a key driver behind the latest rally on Wall Street. Investors have been hoping that trade differences between the two nations would lessen, and reduce uncertainties in the business community.

The thinking that some relief on the trade front was nearing has also driven up bond yields, which are at their highest levels since July. In turn, the uptick in yields has lifted shares of the big banks, but weighed on the stocks of homebuilders and utilities.

Today’s modest uptick in yields, to 1.94% on the 10-year T-note, was supported by a favorable reading on the University of Michigan’s preliminary November consumer sentiment index, which rose to its best level since July.

As it turned out, though, the downbeat tone to the trade news this morning largely kept stocks in check for the rest of the session.

The on-again, off-again nature of progress in negotiations has unsettled investors on numerous occasions. It is probably important for at least a partial trade deal to materialize for stocks to move higher.

A reduction in trade tensions could allow the economy to expand more rapidly in 2020 if business investment were to pick up.

Meanwhile, among the market’s sectors, healthcare stocks led the way to close out the week, while shares of utilities and of energy companies were among the laggards.

Among individual names, shares of Dow-30 component Disney (DIS Free Disney Stock Report) outperformed as excitement built regarding the pending release of the company’s streaming product. That outweighed a reported decline in fiscal fourth-quarter profits at the entertainment giant.

At the close, the Dow was up six points; the S&P 500 gained eight points; and the NASDAQ pushed ahead 41 points. Safe to say, trade talks will be in focus next week, especially with earnings season winding down and the Federal Reserve apparently on hold.  - Robert Mitkowski

At the time of this writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - News that the United States and China had agreed to roll back all existing trade tariffs in phases gave the stock market another shot in the arm yesterday morning, sending the major large-cap equity indexes up to yet additional all-time highs. In all, the good news pushed the Dow Jones Industrial Average beyond the 27,700 mark, while the NASDAQ pushed close to 8,500. It was a further solid advance for a stock market that really caught fire late last week when the Labor Department reported a better-than-forecast rise in non-farm payrolls during October.

The Dow then continued to lead the way higher throughout the morning, with trade bellwethers Caterpillar (CAT Free Caterpillar Stock Report) and Boeing (BA Free Boeing Stock Report) each up by better than 1%. The S&P 500 Index and the NASDAQ also did reasonably well, with some selective technology names, such as Apple (AAPL Free Apple Stock Report) racing to additional all-time highs. As noted, China and our country had earlier in the day simultaneously agreed to cancel some existing tariffs ion one another's goods. A spokesman for China's government said that both sides were closer to a so-called “phase one” trade agreement after two weeks of intense negotiations.  

There have been some notable shifts in trade in recent days, with the two sides earlier suggesting that a meeting of the respective heads of state could be put off until December and then following that disappointing forecast up with the tariff roll backs. Overall, though, there has been a steady climb in trade optimism in recent weeks, which has helped the S&P 500 to rise by more than 5% in the past month. In other news, initial weekly jobless claims fell slightly in the latest seven-day period. Later today, the University of Michigan will weigh in with its consumer sentiment readings.

Elsewhere, there was little of note to report, with earnings season fast winding down and economic news sparse for another several days. However, the major trade changes are keeping investors quite busy and active. For now, our evolving relations with China have been a distinct positive in recent sessions. Now, as we have been noting, we may need additional catalysts. Meanwhile, the market's latest advance continued to go forward, with the Dow's rise staying above the 200-point mark for the most part. However, there was some easing off in the S&P 500 and NASDAQ gains late in the session, while the small-caps lagged a bit.

The moderating advance would persist into the close, and when all the numbers were in, the Dow still was up by 182 points, but the S&P 500 has pared its advance to just eight points, while the NASDAQ, once up, more than 70 points, added 24 points. Still, the three composites reached all-time highs. Also rising, but in a less ebullient way, were Treasury note yields, with the 10-year Treasury climbing to an intraday best yield of 1.97%, finally closing at 1.93%. Earlier this fall, the yield had dropped to 1.43%. Oil prices also rose on lessening trade worries.

Looking ahead to the final day of the trading session, we see that stocks were lower in trading in Asia overnight, while in Europe, the major bourses are showing early losses, as well. Also, of note, oil prices are falling amid some trade concerns, but Treasury yields are ticking slightly higher. Finally, with all eyes still on our trade relations with China, the U.S. equity futures are mixed ahead of the new trading session.  - Harvey S. Katz, CFA 

At the time of this article’s writing, the author held positions in one or more of the companies mentioned.