Stocks close higher, S&P 500 post biggest weekly gain since 2013

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Stocks closed slightly higher on Friday, extending their winning streak to six days in a row, and posted strong weekly gains.

But the major averages ended off their session highs after news broke that special counsel Robert Mueller indicted 13 Russian nationals and three Russian entities for allegedly interfering with the 2016 U.S. presidential election.

The market soon stabilized after Deputy Attorney General Rod Rosenstein emphasized in a press conference that these indictments had no allegations of willing support to the Russians by Americans. “The nature of the scheme was that the defendants took extraordinary steps to make it appear that they were ordinary American political activists,” he said.

“One of the key point is there’s no finding that this actually affected the election results,” said Art Hogan, chief market strategist at B. Riley FBR. “To the extent this is a first blush, it doesn’t look market negative.”

The Dow Jones industrial average closed 19.01 points higher at 25,219.38, with Pfizer as the best-performing stock in the index. The Dow also posted its sixth straight day of gains. At its session highs, it rose 232.05 points.

The S&P 500 closed just 0.04 percent higher at 2,732.22, eking out a six-day winning streak, after gaining as much as 0.9 percent. Utilities and health care were the best-performing sectors in the broad index.

Meanwhile, the Nasdaq composite snapped a five-day winning streak, closing 0.2 percent lower at 7,239.47. It rose as much as 0.7 percent on the day.

“All eyes are on DC,” said Dan McMahon, director of equity trading at Raymond James. “But that being said, that’s been the case for the past 13 months and look at where we are. It almost feels like the new normal.”

Traders work on the floor of the New York Stock Exchange.

Brendan McDermott | Getty Images
Traders work on the floor of the New York Stock Exchange.

Despite closing off their session highs, the major indexes posted strong weekly gains. The Dow and S&P 500 rose 4.3 percent each, posting their best weekly performances since 2016 and 2013, respectively. The Nasdaq jumped 5.3 percent, meanwhile, notching its biggest one-week gain since 2011.

“I think the foreseeable future will be marked by volatility,” McMahon of Raymond James. But “we are still of the mind that we’re in a secular bull market.”

Stocks closed sharply higher on Thursday after choppy trading. The Dow finished 306 points higher, while the S&P 500 and Nasdaq gained more than 1 percent.

They have also rebounded sharply from the correction levels seen last week. On Feb. 8, the major averages closed 10 percent below all-time highs set last month.

“Right now, there’s a tug-of-war between the fear of missing out and the fear of getting caught,” said Tom Martin, senior portfolio manager at Globalt. “There’s just a bit more uncertainty and that’s reflected in the volatility.”

As of Friday’s close, the S&P 500 was just 4.9 percent away from erasing those losses. The Dow and Nasdaq had to rise 5.3 and 3.6 percent, respectively, to make up the ground lost.

“Risk continues to be on despite some spotty data and continued bearish sentiment,” Michael Block, chief strategist at Rhino Trading Partners, said in a note to clients. “The very happening of the recent volatile episode makes more volatility more likely, but that doesn’t make it a given.”

During the previous 10 sessions, the S&P 500 has posted eight moves greater than 1 percent. For context, the broad index posted only eight 1 percent moves all of last year. More volatility could be seen Friday as February options expire. These events have historically increased market volatility.

Strategists and traders have pointed to several factors as a catalyst for the market’s recent sell-off. One of the most cited ones is a sharp rise in government bond rates. Others pointed to the implosion of several volatility-related products as well as algorithmic trading.

But Wall Street seemed to shake off these concerns quickly. In fact, the 10-year U.S. note yield rose to a four-year high this week before as stocks continued their march higher.

In economic news, housing starts rose 9.7 percent in January, easily surpassing analyst expectations. Import prices, meanwhile, gained 1 percent, while export prices advanced 0.8 percent. Consumer sentiment rose more than expected, according to a preliminary reading from the University of Michigan.

In corporate news, Coca-Cola shares rose 0.5 percent after the company reported better-than-expected earnings. Coca-Cola said its best-performing drinks were water and sports drinks.

Wendy’s shares jumped 4.4 percent after analysts at Guggenheim upgraded them to buy from neutral, noting their valuation is more attractive after their recent pullback.

U.S. Steel, meanwhile, surged 14.8 percent after the Commerce Department recommended imposing steep tariffs on foreign steel and aluminum producers.


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Loknath Das

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