Stocks on the rise Friday but positioned for hefty weekly losses

The Dow Jones Industrial Average ended up 300 points on Friday, rising for a second day after a volatile week which saw its biggest one day fall for the year on Wednesday, but stocks still ended down for the week.

Trading was erratic this week as investors were buffeted by good news on U.S. retail sales on the one hand, and the ongoing dispute between the U.S. and China over trade policy, which has dampened some company earnings and hit the farm sector on the other.

By Friday the Dow had seen its 8th daily move of 1% in either direction for the month, the most 1% moves since December 2018 when it had 12 days that saw similar size moves. Similarly, the S&P 500 index saw its 7th one-day 1% move of the month, the most since December 2018 when it had 10 such moves.

How are the major benchmarks faring?

The Dow Jones Industrial Average   rose 306.62 points, or 1.2%, to 25,886.01, while the S&P 500 index  added 41.08 points, or 1.44%, to 2,888.68. The Nasdaq Composite index   gained 129.38 points, or 1.67%, to 7,895.99

Stocks end mostly higher Thursday, taking back a portion of Wednesday’s selloff which saw the biggest one day sell off so far this year, but despite a second day of gains Friday, the Dow has fallen for three consecutive weeks and is down 401.43 points or 1.53% this week. Similarly, the S&P 500 index ended the week down 1.03% for a third week of falls.

What’s driving the market?

Wall Street staged a relief rally Friday, following a volatile week of trade dominated by concerns about rising U.S.-China trade policy tensions, weakening global economic growth, and falling bond yields.

Bank stocks like Bank of America  and Citigroup  were among the leading gainers Friday as longer term bond yields held above short term debt yields, easing some recession fears. The SPDR S&P Bank ETF  was up 2.5% for its best day since June.

On Wednesday the 2-year/10-year yield spread went negative for the first time since the 2008 financial crisis as investors fretted about a global economic slowdown. On Friday, the 10-year yield  was up 2.6 basis points at 1.558%.

Earlier this week “Market players off loaded riskier assets like a hot potato and rushed to perceived safe havens like bonds and gold as trade tensions and global growth fears promoted risk aversion” said Lukman Otunuga, senior research analyst at FXTM, in a note. “Although Treasury yields are climbing away from record lows on Friday as some tranquility returns to markets, the movements in the bond markets are poised to remain on investors radars in the week ahead.”

Some analysts also tied support for stocks on Friday to hope for more monetary stimulus from central banks. China’s state planner said it would introduce a plan to support disposable income this year and in 2020 in an effort to boost consumption, . Credit rating agency Fitch noted that have loosened monetary policy in the past six months. Some support for stocks was also seen after the German publication if necessary to combat a recession.

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On international trade, President Donald Trump on Thursday said he expected the U.S.-China trade dispute to be short and that September talks were still scheduled to go ahead despite the altercation between Trump and China recently. China on Thursday said it was prepared to take unspecified steps in response to Trump’s decision earlier this month to impose additional tariffs on imports of Chinese goods beginning Sept. 1.

In economic news though, U.S. housing starts fell 4% to an annual rate of 1.19 million, . Building permits, however, rose 8.4% to an annual rate 1.34 million, surpassing the consensus estimate of 1.29 million starts, according to a MarketWatch poll of economists.

“While the headline number is showing consistent weakness, when you dig into it, we’ve got a mixed read,” wrote Mike Loewengart vice president of investment strategy at E-Trade, in an email. “The pop in single-family home building, which is really the largest component of the housing market, gives us a reason to be optimistic.”

The University of Michigan’s consumer sentiment survey from 98.4 in July, below expectations of 96.8, per a MarketWatch poll of economists.

Which stocks are in focus?

Shares of farm-equipment maker Deere & Co.  ended up 4.00% Friday , but fell short on earnings.

Nvidia Corp.   that beat Wall Street expectations for the second quarter. The company surpassed estimates for both earnings and revenue for the quarter following several quarters of weak performance for the company and the chip-making industry more broadly, which had lead Nvidia’s stock to fall 22% between April and Friday’s close. Shares rose 7.48% Friday.

Fellow semiconductor firm Applied Materials Inc.  also fiscal third-quarter earnings and revenues late Thursday, though it provided slightly weaker-than-hoped earnings guidance for the fourth quarter.

General Electric had its worst day in 11 years Thursday on but bounced nearly 10% Friday after CEO Larry Culp called the accusation “market manipulation” and bought nearly $2 million worth of the company’s stock.

How are other markets trading?

Stocks closed higher in Asia Friday, with the China CSI 300  adding 0.5%, Japan’s Nikkei 225  rising 0.1% and Hong Kong’s Hang Seng index  added 0.9%.

In Europe, stocks were on the rise, with the pan-European Stoxx Europe 600 adding 1.3%.

U.S. Treasury yields followed their German counterparts higher after Der Spiegel reported that Berlin would be willing to run fiscal deficits during a recession, citing sources in the German Chancellery and the finance ministry. The 10-year note yield  was up 6 basis points to 1.58% after seeing a two year low earlier this week.

In commodities markets, the price of crude oil  was up 0.2% to nearly $54.57 per barrel, for a gain for the week, even though

Gold  fell back from a six year high to around $1,523.80 but

The ICE U.S. dollar index  , meanwhile, was little changed near two year highs seen earlier this month.

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