Stocks closed higher on Friday, led by banks after the Federal Reserve’s second round of stress test results late Thursday, but investors remain focused on the planned meeting on trade issues between President Donald Trump and Chinese President Xi Jinping at the G-20 meeting in Japan Friday night New York time.
Friday also marks a rebalancing of the FTSE Russell index, of mostly small capitalization stocks, which will occur at the close of trade.
J.P. Morgan Chase
and Wells Fargo
all rose. All 18 banks past the Federal Reserve stress tests, including Deutsche Bank AG
which had earlier failed, and many of the largest lenders in the U.S. announced increased payouts to shareholders in the wake of the results.
The total payouts to bank shareholders from dividends and buybacks will hit $173 billion, a record high amount for the group. Goldman
raised its dividend by nearly 50%.
But Wall Street’s gains were restrained as investors awaited the Trump-Xi trade meeting scheduled for Saturday Japan time. The Chinese Ministry of Commerce has called on Washington to cancel its import tariffs and sanctions measures on Huawei and other Chinese companies, while Trump has reiterated a threat to impose tariffs on the remaining $300 billion of Chinese imports if talks fail.
“There’s a lot of uncertainty as to what the meeting, due to place on Saturday (02.30 GMT), will produce, but the minimum outcome that traders are anticipating is for the two sides to restart the stalled trade negotiations and delay imposing any additional tariffs,” wrote Raffi Boyadjian, senior investment analyst at brokerage XM, in a daily research note. .
How did the major benchmarks fare?
The Dow Jones Industrial Average
finished up 73.38 points, or 0.3%, at 26,599.96, the S&P 500 index
gained 16.84 points, or 0.6%, to end at 2,941.76, while the Nasdaq Composite Index
finished the session up 38.49 points, or 0.5%, at 8,006.24.
On the final trading day of the month and quarter, the Dow logged a 7.2% gain for the month, representing its best June gain since 1938, and 14% for the first half, while the S&P 500 index rose 6.9% on the month, its best June return since 1955, and 17.4% for the year. The Nasdaq added 7.4% on the month, and rose 21% for the first six months of 2019.
June’s gains came after the Fed opened the door for easier monetary policy later this year. The Fed said earlier this month it will “act as appropriate” to maintain the current economic expansion. This lifted market expectations for a July rate cut.
In U.S. economic data Friday, the Commerce Department reported U.S. consumer spending rose 0.4% in May, while personal incomes rose 0.5% during the same period. Economists polled by MarketWatch had expected gains of 0.3% and 0.5%, respectively.
The Federal Reserve’s most closely watched measure of inflation, the PCE index, showed yearly inflation falling from 1.6% in April to 1.5% in May, potentially supporting the argument for the Fed to lower interest rates in the coming months, as it attempts to bring inflation to its 2% annual goal.
The University of Michigan released its final reading of consumer confidence for the month of June, with its index coming in at 98.2, above the 98 expected by economists polled by MarketWatch, though off the 100 level seen in May, which was the highest reading in eight months.
Which stocks are in focus?
Apple Inc.’s stock
closed steady after design legend Jony Ive said he was leaving the iPhone maker to start his own venture.
Boeing Co. shares
ended little changed after losing 2.9% Thursday on news that the company’s 737 MAX fleet, which has been grounded since March after two fatal crashes, could take much longer to receive regulatory clearance to bring the jets back online.
Fellow Dow constituent, UnitedHealth Group Inc.
said Friday that it named Dirk McMahon, currently president and chief operating officer of its Optum platform as its new chief executive.
How did other assets trade?
The 10-year Treasury note yield
fell from Thursday’s close to 2.000%. For the quarter, yields on 10-year paper notched their largest quarterly decline since March 2016, according to Dow Jones Market data.
In commodities markets, August West Texas Intermediate crude
settled at $58.47 a barrel. Month to date, prices climbed 9.3%.
rose to settle at $1,413.70 an ounce after seeing a six-year high at $1,418.70 for a most active contract on Tuesday.