U.S. stocks pared losses at market close Friday after spending much of the session firmly in the red.
Although the Dow ended Friday’s session lower, both the Dow and the Nasdaq posted their seventh consecutive week of gains as of market close Friday. The Dow ended the week higher by 0.17%, while the Nasdaq ended higher by 0.47%. The S&P 500 increased about 0.05% this week, but had posted a weekly loss for the week ending January 25.
Headlines pointing to a negative outlook on trade have choked investors’ risk appetites. Trump, according to multiple reports, told reporters “No” when asked whether he would meet with Chinese President Xi Jinping ahead of a March 1 deadline, after which tariff rates are set to escalate. Stocks took a leg lower around the time of the reports.
“After a surge off the lows of December, it is arguably the case that indices have been at risk of a pullback, even if they look primed for more gains over the longer term. Even the losses of the past three days barely put a dent in the current rally, but it is still surprising how a simple ‘no’ from the world’s most powerful leader has prompted a sudden drop in risk appetite,” Chris Beauchamp, chief market analyst at IG Group, wrote in an email. “Worryingly, with Chinese markets set to return from their bank holiday, we could see the new week begin in bearish fashion, adding to the gloom surrounding equities.”
Trump previously wrote in a Tweet at the end of January that “no final deal will be made until my friend President Xi, and I, meet in the near future.” White House economic advisor Larry Kudlow also said Thursday in an interview with Fox Business that the two sides had a “pretty sizable distance” to go before reaching a deal.
Many market participants and pundits have reiterated tariffs’ impact to equities.
“A quick reminder. Nearly all of the world’s trade is conducted by large companies. If trade is taxed, one of three things happens: large companies pay the tax; customers of large companies pay the tax; large companies spend money avoiding the tax,” Paul Donovan, global chief economist for UBS, wrote in commentary Friday. “In other words, a tax on trade is a tax on equities.”
Both tariffs and related worries over China’s slowing economy have been a central theme of commentary from major corporations. A number of U.S. companies this earnings season – including industrial bellwether Caterpillar, chipmaker Nvidia, manufacturer 3M and tech giant Apple – have blamed China at least in part for disappointing results.
The past several weeks’ steady stream of corporate earnings is slowing to a trickle, with more than three-quarters of the S&P 500’s market capitalization having reported fourth quarter results as of Friday morning. Earnings are beating by 3.5%, with 64% of companies surpassing their bottom-line estimates, Jonathan Golub, chief U.S. equity strategist of Credit Suisse, wrote in an email. This compares to 4.9% and 70% over the past three years.
STOCKS: Mattel gets a boost on Barbie, Sears sale to Eddie Lampert approved
Mattel (MAT) reported much stronger-than-expected earnings for the fiscal fourth quarter, posting adjusting earnings of 4 cents per share versus consensus expectations of a loss of 14 cents, according to Bloomberg data. In the year-ago quarter, losses were 82 cents per shares. Sales of Barbie, which rose 12% in the quarter and reached a five-year high, helped buoy results. Hot Wheels sales were also strong, with the brand’s sales also increasing 12% on a constant currency basis.
Peer toymaker Hasbro (HAS), however, missed Wall Street’s earnings expectations in results reported Friday. Adjusted earnings were $1.33 per share, a 42% decline from the year-ago quarter and below Bloomberg-compiled consensus estimates of $1.71 per share. Revenue fell to $1.39 billion, also below expectations of $1.52 billion. Hasbro’s results come amid the bankruptcy of Toys R Us, and CEO Brian Goldner said in a statement that the company was not “able to recapture as much of the Toys R Us business during the holiday period as we anticipated as the effect of its liquidated inventory in the market was more impactful than we and industry experts expected.”
A federal bankruptcy court judge approved a deal for Sears (SHLDQ) Chairman Eddie Lampert to purchase the beleaguered retailer by way of his hedge fund, ESL Investments. The $5.2 billion deal is expected to save 425 stores and about 45,000 jobs, and comes after Sears had filed for Chapter 11 bankruptcy in October.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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