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Dow's 9-week winning streak is the longest in nearly 24 years

The Dow posted its ninth consecutive week of advances, its longest weekly winning streak in nearly 24 years, as investors continued to digest commentary surrounding progress toward a U.S.-China trade deal.

The Dow (^DJI) closed at 26,031.81 points, having climbed 0.7%, or 181.18 points, by the end of Friday’s session. This was the first time the index crossed 26,000 points since November 9, and its nine straight weeks gains marked the longest streak since a 10-week run between March and May 1995.

The S&P 500 (^GSPC) rose 0.64%, or 17.79 points, with tech stocks leading advances as the index posted its fourth consecutive week of gains. The Nasdaq (^IXIC) rose 0.91%, or 67.84 points, and posted its ninth straight week of advances, tying for the longest weekly winning streak since May 2009.

Each of the three major indices surged to new 2019 highs during Friday’s session. The S&P 500 rose as high as to 2,794.2 points, the highest level since December. The Dow and the Nasdaq each rose to their highest levels in more than 3 months, touching 26,052.9 points and 7,527.54 points, respectively, at their intraday highs.

Trump met with Chinese Vice Premier Liu He in Washington, D.C. Friday afternoon in the latest round of discussions as the U.S. and China attempt to come to a deal on trade. Trump told reporters Friday that discussions have been going well, but “who knows” whether a final deal will emerge, according to a CNBC report. Trump also said he expects to meet with Chinese leader Xi Jinping in the near-term, according to a Bloomberg report.

Talks have been under way for more than a month between delegations from the two sides, and Trump and Liu previously met in late January for an earlier round of talks. Earlier this week, reports that the U.S. and China had begun carving out memorandums of understanding to underscore a final trade deal helped boost optimism for a resolution.

The rate of tariffs on Chinese-made goods is set to increase to 25% from 10% if discussions are not completed by March 1. However, Trump has signaled recently he would consider extending this deadline.

Aside from reacting to additional stimulus from Federal Reserve commentary and corporate earnings results, the three major domestic indices so far this year have shifted largely in lockstep with the corresponding optimism or pessimism officials have telegraphed for a China trade deal.

“Trade is the likely catalyst to tip the scales in either direction, and there are three scenarios: If negotiations crumble, we could get a pullback, if they strike a deal we could see a breakout, and anything in between could be a jolt in either direction,” Mary Ryan, senior equity options strategist at E-Trade Financial, wrote in an email. “Given this uncertainty, traders need to be asking themselves how much bullishness is already priced into the market and then determine the size and length of a potential jump. Bottom line: All of these outcomes carry at least some risk of a pullback, so an uptick in volatility could be in the cards.”

China trade discussions aside, other geopolitical headlines Friday also pressured stocks. Bloomberg News reported Friday that the European Union would pursue retaliatory tariffs on products from companies including Caterpillar (CAT) and Xerox (XRX) if Trump imposes automotive tariffs on the EU. This follows the release of a Commerce Department statement Sunday saying that it had completed an investigation into the effect of imports of automobiles and parts on U.S. national security. While the results are not yet public, they could advise for the imposition of 25% automotive levies, which was the rate Trump had considered when he first requested the study last May.

Throughout the day, a parade of Federal Open Market Committee members whose monetary policy inclinations span the spectrum from dovish to hawkish delivered remarks. Speakers included Atlanta Fed President Raphael Bostic, New York Fed President John Williams, San Francisco Fed President Mary Daly, Vice Chairman Richard Clarida, St. Louis Fed President James Bullard, Philadelphia Fed President Patrick Harker and Vice Chairman Randal Quarles.

Daly and Williams on Friday said that they carry some concerns about persistently low inflation rates, with Williams asserting that central bankers must be “vigilant” about inflation – and public expectations of inflation – moving either up or down too sharply. Other Fed speakers addressed the central bank’s balance sheet normalization process, with Quarles communicating a preference for the Fed to shift its Treasury securities holdings toward shorter-term assets, and Bullard noting that an ideal “neutral” balance sheet would comprise Treasuries matching the U.S. Treasury portfolio, to keep the central bank “out of the idea of favoring any particular sector of the yield curve or particular sector of the economy.”

These comments come following the release of the FOMC’s latest meeting minutes, which pointed to a near-term plan to end the central bank’s balance sheet normalization process and reiterated officials’ commitment to a “patient” posturing when it comes to future interest rate hikes.

STOCKS:

The Kraft Heinz Company’s (KHC) stock extended steep losses after the company posted strikingly downbeat earnings results that included announcements of a multi-billion dollar write-down of some of its flagship brands, slashed dividend and an investigation by the Securities and Exchange Commission. The consumer food brands company wrote down the value of assets including its Kraft and Oscar Meyer trademarks by $15.4 billion, which comes amid pressure from competing food retailers, including Amazon (AMZN), Walmart (WMT) and Costco (COST) as well as changing consumer tastes. These charges to reduce goodwill resulted in a net loss of $12.6 billion, or a GAAP loss of $10.34 per share. The company also disclosed that it received a subpoena in October 2018 from the SEC associated with the company’s procurement practices and agreements with vendors.

The slump in Kraft Heinz’s stock spurred Barclays to slash its fourth-quarter earnings estimate for Warren Buffet’s Berkshire Hathaway (BRK-ABRK-B), which owns nearly 27% of Kraft Heinz common shares. Barclays analyst Jay Gelb lowered estimates for Berkshire Hathaway’s quarterly earnings to $1,726 from $3,522 per A share and to $1.15 from $2.35 per B share. Barclays also said “substantial catastrophe losses” for the global property and casualty insurance industry as a result of Hurricane Michael and the California wildfires likely negatively impacted Berkshire’s earnings. Berkshire Hathaway reports results Saturday.

Roku (ROKU) delivered results that beat Wall Street’s expectations on the top and bottom lines. Fourth-quarter adjusted earnings were 5 cents per share on revenue of $275.7 million, coming ahead of consensus estimates of 3 cents per share on revenue of $262.4 million. The company also said it expected to see first-quarter sales between $185 to $190 million, roughly in-line with consensus estimates of $188 million. The streaming product company said that it added nearly 8 million active accounts in 2018 to reach a total of 27 million active accounts at year-end as more U.S. households cut the cord on traditional cable.

Dropbox (DBX) posted better-than-expected quarterly earnings and sales, but these beats were eclipsed by a weak outlook for current-quarter operating margins. The file-sharing company said it sees a first-quarter non-GAAP operating margin of between 7% to 8%, versus 11% in the fourth quarter and 10.9% in the first quarter of 2018. Results for the fourth quarter, however, were strong, with adjusted earnings of 10 cents per share and sales of $375.9 million ahead of expectations of 8 cents per share and $370.1 million. The company also said its average revenue per paying user rose to $117.64, from $111.91 in the year-ago quarter. Paying users of 12.7 million rose by nearly 2 million year-over-year.

Wayfair (W) shares surged after the company reported quarterly results that beat expectations on the top and bottom lines. Adjusted loss came to $1.12 per share, narrower than the $1.30 anticipated by analysts. Fourth-quarter sales of $2.01 billion were also ahead of expectations of $1.97 billion. The e-commerce home furnishing company said active customers in its Direct Retail segment increased 37.9% year-over-year to 15.2 million as of the end of 2018, and the number of repeat customers increased 200 basis points to 66.4%.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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