U.S. stocks traded mostly lower Friday, giving back early gains, after President Trump and Chinese officials announced a trade deal that includes a reduction of tariffs and promises by China to buy more U.S. goods.

Meanwhile, a decisive victory for Conservatives in Thursday’s U.K. election that reduces policy uncertainty and clears a path for Brexit also boosted investor sentiment for a while.

How are benchmarks performing?

The Dow Jones Industrial Average 

DJIA, -0.21%

fell 44 points, 0.2%, to 28,087, while the S&P 500 index

SPX, -0.19%

 fell 6 points, or 0.2%, to 3,162 and the Nasdaq Composite index

COMP, +0.03%

  lost less than a point at 8,716.

On Thursday, the Dow  closed 220.75 points, or 0.8% higher, at 28,132.05, just shy of a new all-time high. The S&P 500 indexgained 0.9% to close at 3,168.58, and the Nasdaq Composite Index added 0.7% to 8,717.32, both new records.

For the week, the Dow is set to gain 0.4%, while the S&P and Nasdaq are poised for gains of 0.7% each.

What’s driving the market

Stocks traded mixed Friday following a volatile start to the trading day, after Chinese officials held a news conference announcing an agreement on U.S.-China trade, saying it had agreed to increase purchases of U.S. agricultural products and was offering new intellectual property protections in return for a reduction in tariffs. President Trump confirmed a deal had been reached by tweet and said the new tariffs on Chinese imports due to take effect on Sunday will not now happen.

“The United States and China have reached an historic and enforceable agreement on a Phase One trade deal that requires structural reforms and other changes to China’s economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange,” according to a statement by the U.S. Trade Representative.

The statement said that the U.S. “will be maintaining 25 percent tariffs on approximately $250 billion of Chinese imports, along with 7.5 percent tariffs on approximately $120 billion of Chinese imports.” suggesting that tariffs of 15% implemented on Sept. 1 will been cut in half. Tariffs that had been planned to go into effect on more than $150 million in annual consumer imports “will not be charged because of the fact we made the deal,” the president said on Twitter.

Chinese officials said that the U.S. would remove more tariffs in stages, though no details were given.

“The deal isn’t as robust as some in the market hopes for, so it’s completely reasonable for the market to pull back and take some profits,” Randy Frederick, vice president of trading and derivatives at Charles Schwab told Marketwatch. “The market had already been pricing in the Dec. 15 tariffs getting removed.”

Frederick argued that it’s unlikely that further “phase-2” deal can be reached before the U.S. elections in November. “The big question is whether the economic data and earnings are sufficient, plus the promise of no new tariffs, to push the market higher.”

Meanwhile, Prime Minister Johnson’s Conservative Party swept to a landslide victory in the U.K. election Thursday, securing a strong majority in Parliament. The convincing win gives him plenty of support to secure a Brexit deal and negotiate a new relationship with the European Union next year.

Brexit questions have been cited as one lingering headwind for global investors. Trump congratulated Johnson on his election victory early Friday via Twitter, and said Britain and the U.S. were now free to strike a “massive new trade deal” after Brexit.

In economic data, U.S. retail sales rose just 0.2% higher in November, below the 0.5% expected by economists polled by MarketWatch, though sales in October were revised to show a 0.4% increase, up from 0.3%. The figures were dragged lower by a decline in purchases at department stores, restaurants, clothing stores, pharmacies and outlets that sell sporting goods, while internet-based sales jumped 0.8%.

The cost of imported goods, meanwhile, rose 0.2%, the fastest since may, driven by higher oil costs. Business inventories rose 0.2% in October from September, according to the Census Department.

New York Fed President John Williams will deliver a lecture on monetary policy to students at the Borough of Manhattan Community College starting at 11 a.m. Eastern Time.

Which stocks are in focus?

Broadcom Inc.

AVGO, -4.97%

 shares fell 4.2%, after it missed fourth quarter profit forecasts late Thursday, though it raised its outlook for 2020.

Oracle Corp.

ORCL, -2.90%

 were under pressure after the software company posted better-than-expected earnings for its fiscal second quarter but came up a bit short on revenue, where it has struggled for years. Shares fell 2.7%.

Costco Wholesale Corp.

COST, -1.51%

 declined 1.3% after the bulk retailer reported fiscal first quarter profit growth Thursday evening that beat analyst expectations, but sales growth that fell short.

Adobe Inc.

ADBE, +4.90%

 shares gained 5% after the digital marketing and media company reported fiscal fourth-quarter adjusted earnings that beat analyst expectations and a more than 20% increase in revenue after the close Thursday.

How are other markets trading?

The yield on the 10-year U.S. Treasury note

TMUBMUSD10Y, -3.72%

 fell 6.5 basis points Friday to 1.836% after surging to a four-week high Thursday.

Crude oil prices were on the rise, with West Texas Intermediate crude

CLF20, +1.05%

 rising 33 cents, or 0.5% to trade at $59.53 a barrel on the New York Mercantile Exchange. Gold prices

GCG20, +0.51%

 were also edging higher, up $4.90, or less than 0.3%, to trade at $1,477.10 an ounce on Comex.

The U.S. dollar lost value against a basket of its trading peers, with the U.S. dollar index

DXY, -0.24%

 declining 0.3%.

In Europe, stocks closed higher with the Stoxx Europe 600

SXXP, +1.11%

 up 1.2%.

In Asia overnight, stocks rallied, with the China CSI 300

000300, +1.98%

 gaining 2%, Japan’s Nikkei 225

NIK, +2.55%

 adding 2.6% and Hong Kong’s Hang Seng index

HSI, +2.57%

 rising 2.6%.

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2019-12-13