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Stocks Waver but Remain Poised for Weekly Gains

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11/08/2019 | 03:57pm EST

By Will Horner and Gunjan Banerji

U.S. stocks were little changed Friday but remained on track to finish the week with gains as investors awaited progress between the U.S. and China on trade.

The Dow Jones Industrial Average fell 8 points, or less than 0.1%. The S&P 500 added 0.1%. The Nasdaq Composite climbed 0.4%. All three indexes are on track for weekly gains of at least 0.7%.

The week has been dominated by trade headlines, sending stock and bond yields sharply higher despite Friday's modest moves. The Dow breached its first new high since July, while the S&P 500 and Nasdaq also touched records.

Investors also grew more confident about economic growth, piling into shares of cyclical stocks during the week and unraveling bets on safer investments like Treasurys. Shares of financials and energy companies in the S&P 500 have been some of the biggest winners this week.

The yield on the 10-year Treasury note closed at its highest level since July as bond prices fell. A bond market signal that had previously been flashing red that a recession is coming has eased up.

"To me interest rates and Treasurys are leading a lot. They're leading a lot of the capital allocation. They're leading a lot of the rotation," said Jason Brady, chief executive of Thornburg Investment Management. Mr. Brady said that he's optimistic about the prospects for banks like JPMorgan Chase & Co.

Still, some of the enthusiasm lifting stocks earlier in the week waned Friday, highlighting the impact of trade sentiment on stock and bond investors.

Although markets had begun betting that a partial trade deal would be accompanied by a rolling-back of existing tariffs, President Trump said Friday that the U.S. hadn't committed to offering such concessions.

"Until we actually see some type of trade deal, the level of uncertainty -- which ultimately will translate into volatility in the market -- will persist," said Brian O'Reilly, head of investment strategy at the Dublin-based Mediolanum International Funds. "Today, we are just seeing a bit of a recalibration of that over-optimism from a news headline without any hard facts."

Adding to enthusiasm among, earnings have largely been better than investors had expected.

Walt Disney shares climbed 4.2% after its earnings beat analysts' expectations.

Gap slumped about 8% after the apparel maker pared its profit targets for the year and said Chief Executive Art Peck would step down immediately.

Oil prices also slipped as the cautious mood on the U.S.-China trade spat spilled over into investors' assessment of the global economic outlook. Brent crude, the global oil benchmark, fell about 2%.

Global markets have also been buoyed lately by signs that a U.S. recession isn't imminent. Consumer confidence ticked higher in early November. The University of Michigan said Friday that its preliminary index of November consumer sentiment was 95.7, up slightly from 95.5 at the end of October.

The Stoxx Europe 600 fell 0.3%. Stocks in Asia also pulled back but capped off a second consecutive week of gains. The Hang Seng declined 0.7% and the Shanghai Composite Index lost 0.5%.

Write to Gunjan Banerji at Gunjan.Banerji@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
CHINA-SHANGHAI COMP -0.78% 2911.05 End-of-day quote.16.54%
DJ INDUSTRIAL -0.40% 27821.09 Delayed Quote.19.75%
HANG SENG -1.53% 26475.92 Real-time Quote.4.03%
NASDAQ 100 -0.66% 8283.752934 Delayed Quote.31.73%
NASDAQ COMP. -0.51% 8526.732283 Delayed Quote.29.17%
S&P 500 -0.38% 3108.46 Delayed Quote.24.00%
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