Stocks Once Again Climb To New Record Highs - U.S. Commentary

(RTTNews) - Following the strength seen in the previous session, stocks saw some further upside during trading on Friday. With the continued upward move, the major averages once again ended the session at new record closing highs.

The major averages finished the session firmly in positive territory but off their best levels of the day. The Dow advanced 96.97 points or 0.5 percent to 20,269.37, the Nasdaq rose 18.95 points or 0.3 percent to 5,734.13 and the S&P 500 climbed 8.23 points or 0.4 percent to 2,316.10.

For the week, the Nasdaq surged up by 1.2 percent, the Dow jumped by 1 percent and the S&P 500 advanced by 0.8 percent.

The continued strength on Wall Street partly reflected renewed optimism about corporate tax reform under President Donald Trump.

At a meeting with airline executives on Thursday, Trump pledged to unveil a tax plan that includes a "big league" reduction in the tax burden on American business in the next few weeks.

"That's coming along very well. We're way ahead of schedule, I believe," Trump said. "We're going to announce something I would say over the next two or three weeks that will be phenomenal in terms of tax."

Trump has previously proposed reducing the corporate income tax rate to 15 or 20 percent from the current rate of 35 percent.

News that Trump spoke by phone with Chinese President Xi Jinping and agreed to honor the "one China" policy also eased concerns about tensions between the two economic superpowers.

On the U.S. economic front, the Labor Department released a report showing that import prices rose by more than expected in January amid another jump in fuel prices.

The report said import prices increased by 0.4 percent in January after climbing by an upwardly revised 0.5 percent in December. Economists had expected import prices to rise by 0.2 percent.

The Labor Department also said export prices inched up by 0.1 percent in January after rising by 0.4 percent in December. The uptick in export prices matched economist estimates.

Meanwhile, a separate report from the University of Michigan showed a bigger than expected pullback in consumer sentiment in February.

The preliminary report showed that the consumer sentiment index dropped to 95.7 in February from the final January reading of 98.5. Economists had expected the index to edge down to 97.9.

The bigger than expected decrease by the index came after it reached its highest level since January of 2004 in the previous month.

Despite the decline, the survey's chief economist Richard Curtin said, "To be sure, confidence remains quite favorable, with only five higher readings in the past decade."

Sector News

Steel stocks saw substantial strength on the day, resulting in a 2.6 percent jump by the NYSE Arca Steel Index. With the surge, the index reached its best closing level in well over two years.

The rally by steel stocks came following the release of upbeat Chinese trade data, with a report from China's Customs Bureau showing significant year-over-year increases in both imports and exports.

Considerable strength was also visible among trucking stocks, as reflected by the 1.5 percent advance by the Dow Jones Trucking Index. The gain lifted the index to a two-month closing high.

Gold, housing, oil, and telecom stocks also saw notable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index soared by 2.5 percent, while China's Shanghai Composite Index rose by 0.4 percent.

The major European markets also moved to the upside on the day. While the French CAC 40 Index closed just above the unchanged line, the German DAX Index edged up by 0.2 percent and the U.K.'s FTSE 100 Index climbed by 0.4 percent.

In the bond market, treasuries climbed off their worst levels but still ended the session in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.4 basis points to 2.409 percent.

Looking Ahead

The U.S. economic calendar for next week starts off relatively quiet but picks up considerably as the week progresses.

A report on producer price inflation is due on Tuesday, while a slew of data is scheduled to be released on Wednesday, including reports on consumer prices, retail sales and industrial production.

Reports on regional manufacturing activity, housing starts, and homebuilder confidence are also scheduled to be released next week.

Federal Reserve Chair Janet Yellen's semi-annual testimony before Congress is also likely to attract attention along with speeches by a number of other Fed officials.

A number of well known companies are also due to report their quarterly results next week, including Cisco (CSCO), PepsiCo (PEP), Molson Coors (TAP), Groupon (GRPN), and Wendy's (WEN).