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Stocks rise ahead of holiday, trade fears take temporary backseat

Stocks rose Friday on low trading volume, as investors took a momentary respite from worries about the U.S.-China trade war, which have dragged down major indexes this week.

The S&P 500 (^GSPC) increased 0.14%, or 3.82 points, as of market close. The Dow (^DJI) rose 0.37%, or 95.22 points, while the Nasdaq (^IXIC) rose 0.11%, or 8.73 points.

Over the past several days, trade-related headlines and a bevy of misses on quarterly earnings expectations from major retailers weighed on blue-chip and technology shares. Despite Friday’s gains, each of the three major indices was lower for the week, with the S&P 500 off by about 1.1%.

On Thursday, President Donald Trump said that Huawei could be a component of an eventual trade pact with China, hinting at a potential roll-back on the tough restrictions against doing business with the Chinese tech giant. That would dent supply chains for a spate of U.S. firms.

“It’s possible that Huawei even would be included in some kind of a trade deal,” Trump told reporters, according to Bloomberg News.

Risk assets were bid ahead of Monday’s holiday, which included West Texas Intermediate crude oil (CL=F). Energy was rebounding from its biggest drop of the year Thursday, with investors worried that the U.S.-China trade dispute could hammer global demand for oil.

Meanwhile, prices for some safe haven assets fell. The yield on the 10-year Treasury note, which moves inversely to the price, rose by about 3 basis points, and gold prices declined.

Overseas, European stocks and sterling jumped after U.K. Prime Minister Theresa May announced that she will resign as Britain’s prime minister on June 7, leaving an opening for a new leader to take over the Brexit process.

In her exit speech, May said she had “done her best” to deliver the results of the 2016 European Union referendum. May will remain in her position until a successor is chosen in mid-July.

The FTSE 100 (^FTSE) closed 0.65% higher to 7,277.73 in Europe, while the British pound (GBPUSD=X) broke above $1.27 against the U.S. dollar.

STOCKS

Foot Locker (FL) shares tumbled 16% Friday after missing expectations in first-quarter results delivered before the bell.

First-quarter adjusted earnings per share (EPS) of $1.53 missed expectations by 7 cents, according to estimates compiled by Bloomberg. Comparable same-store sales rose just 4.6%, versus an increase of 5.5% expected, and revenue of $2.08 billion fell short of estimates for $2.11 billion.

Shares of Nike (NKE) and Adidas (ADS.DE) – both brands that Foot Locker carries – also fell in pre-market trading, in sympathy with Foot Locker’s earnings miss.

Shoes are displayed at the Foot Locker store in Boston, Friday, Aug. 25, 2017. (AP Photo/Charles Krupa)

Ross Stores (ROST) topped expectations in first-quarter results, but guidance for the second quarter came up short compared to estimates. Shares declined 1.83% as of market close.

First-quarter earnings per share of $1.15 beat estimates by 3 cents, and sales of $3.80 billion were just ahead of estimates for $3.79 billion. The off-price department store said it expects to deliver second-quarter earnings of between $1.06 to $1.11 per share, below expectations for $1.13 per share.

Autodesk (ADSK) shares declined after the software company missed Wall Street’s expectations for quarterly sales and provided weak guidance for the full year.

Adjusted earnings totaled 45 cents per share for the first quarter, matching estimates, while total sales of $735.5 million missed expectations for $740.6 million. Autodesk said it sees full-year adjusted EPS of between $2.71 to $2.90, with the midpoint missing estimates for $2.85.

Second-quarter adjusted EPS guidance also came in light, with the company guiding for between 59 cents to 63 cents a share.

ECONOMY

Durable goods orders declined 2.1% in April, according to a preliminary report from the U.S. Census Bureau Friday. This was below March’s downwardly revised reading to a 1.7% increase, and short of expectations for just a 2% decline in April, according to Bloomberg data.

Excluding transportation orders, durable goods orders were flat in April, versus a 0.1% increase expected. Orders for transportation equipment dropped 5.9% in April, after rising by the same amount in march.

Core non-defense capital goods orders, which exclude aircraft, also dropped more than expected in April. This measure, which serves as a gauge of business capital expenditure plans, declined 0.9%, below the 0.3% decrease expected.

“The weakness of the April durable goods data, which showed underlying orders unchanged following a downwardly-revised plunge in March, provides further evidence that economic growth is slowing sharply in the second quarter,” Andrew Hunter, senior U.S. economist for Capital Economics, wrote in a note. “Business equipment investment growth has remained unusually weak in the second quarter, even before the potential hit to business confidence from the renewed flare-up in trade tensions.”

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

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