S&P 500 Rises 1.5% This Week to Four-Month High

The Standard & Poor’s 500 index rose 1.5% to the highest in more than four months this week as investors focused on strong gains in technology stocks and mostly ignored concerns about the escalating trade spat between the US and China.

The benchmark index ended the week at 2,801.31, up from last week’s close of 2,759.82.

Facebook (FB) shares rose to a record on Friday on a positive outlook for ad revenue, and Amazon (AMZN) jumped to the highest ever ahead of its annual Prime day when it discounts several items. Other retailers including Walmart (WMT) are offering discounts to battle the online retailer.

JPMorgan Chase & Co (JPM) on Friday reported second-quarter financials that topped expectations as profits reached new record highs. The bank reported earnings of $2.29 a share, up from $1.82 during the same quarter last year and consensus compiled by Capital IQ for $2.22 a share. Total revenue was reported at $27.75 billion, up from $25.73 billion in the same period a year ago and exceeded the Street projection of $27.28 billion.

Second-quarter profit was reported at $8.32 billion, an 18% increase, the highest ever for the company. Trading revenue jumped 13% to $5.4 billion, the company said. Loans were up 4% to $949 billion.

Earlier in the week, Delta Air Lines (DAL) reported second-quarter adjusted earnings of $1.77 per share, up from $1.59 a year earlier and estimates for $1.72. Sales were reported at $11.78 billion, up almost 10% from last year and topping forecasts for $11.73 billion.

It wasn’t all good news, though, as Wells Fargo & Company (WFC) reported declines in second-quarter earnings and revenue, with loans and deposits sliding as the lender continues to work to restore confidence after coming under fire over its sales practices.

Net income fell to $0.98 per diluted share compared with $1.08 a year earlier, missing the consensus from Capital IQ for $1.12. The second-quarter figure included a net discrete income tax expense of $0.10 per share. Revenue fell to $21.55 billion from $22.2 billion, just missing the Wall Street view for $21.64 billion.

Economic reports this week were mostly positive, also boosting the S&P, as the Consumer Price Index in June showed a 12-month gain of 2.9%, the largest year-on-year increase since February 2012. Food prices were up 1.4% annually and energy jumped 12%.

Jobless claims for the seven days that ended on July 7 were reported at 214,000, easily beating expectations for a decline to 225,000. Claims the prior week were revised higher to 232,000, according to the Labor Department.

The major indexes got a shock midweek when President Trump threatened to impose tariffs on another $200 billion worth of Chinese goods. China didn’t immediately respond, which some analysts said is a good sign, however, tempering bearishness in the markets.

In a report on Friday, China said its trade surplus with the US jumped to a record high in June. Many analysts, however, said it’s possible the increase was a one-off event as companies likely were scrambling to buy Chinese goods before tariffs were enacted on July 6.

The Asian country’s trade surplus with the US rose to almost $29 billion, up from $24.6 billion in May, according to China’s General Administration of Customs. That’s the highest since record-keeping started two decades ago.

Eight of the 11 S&P sectors were higher during the week, led by technology, industrials and consumer discretionary stocks.

Tech stocks were up 2.3% for the week on the back of strong performance by Facebook and Amazon, industrials gained 2.2% and consumer discretionary shares were up 2.1%.

The healthcare sector gained 1.6%, financials were up 1.2% on earnings from JPMorgan Chase and other large-cap banks, consumer staples added 1% and materials gained 0.3%. Energy stocks were up 0.6% for the week despite West Texas Intermediate crude prices dropping 4% to just over $70 a barrel.

Telecom led decliners, falling 1.6%, utilities were down 1.2% and the real estate sector declined 0.9%.

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