U.S. stocks are rising Friday, reversing a three-day losing streak as investors digest news of a potential resolution to the U.S.-China trade war.
Healthcare and bank stocks led the gainers. Retailers also rose. Gap surged after saying it plans to spin off its Old Navy brand. Tesla sank after Chief Executive Elon Musk warned that the electric car maker is unlikely to see a profit this quarter and announced most showrooms will close. Foot Locker rose after reporting strong financial results and a solid forecast.
U.S. officials are preparing a China trade deal that could be signed within a month, according to news agency Bloomberg. The trade war between the world’s largest economies has raised prices for consumers and companies. It’s also deepened concerns that escalating tariffs could worsen the global economy’s slowdown.
President Trump held off imposing higher tariffs on $200 billion worth of Chinese products as negotiations continued. Months ago, he threatened to enact the tariffs March 2 if a deal hadn’t been reached. Washington accuses China’s government of pressuring foreign companies’ to hand over technology or stealing such technology outright.
Stocks pulled back from an initial early-morning jump after a report showed manufacturing growth slowed in February. Investors have remained confident in the strength of the U.S. economy despite weak economic reports. Consumer spending in December took its biggest tumble in nine years. Disappointing retail sales was another sign that growth slowed at the end of 2018.
KEEPING SCORE: The Dow Jones Industrial Average rose 40 points, or 0.2%, to 25,956 as of 11:50 a.m. The S&P 500 index and Nasdaq composite were both up 0.3%.
OLD NAVY SAILING AWAY: Gap surged 19% after it said it will spin off its Old Navy brand into a separate company. The retailer will retain its namesake brand, along with Banana Republic and others, in a new, yet to be named company.
The split comes as Old Navy has thrived while Gap struggles with increasing competition from the likes of Target and Amazon.
RUNNING START: Foot Locker jumped 6% after the footwear and athletic apparel retailer blew past investor expectations for the fourth quarter. The company also forecast double-digit profit growth in 2019.
The company’s same-store sales, which measures growth at existing stores, hit 9.7%, more than doubling what Wall Street expected.
WEAK CHARGE: Tesla fell after Musk said the electric car maker is unlikely to turn a profit in the first quarter. The company also began selling a $35,000 version of its Model 3. The car previously cost at least $42,900.
Tesla is cutting costs by shifting to online sales of its vehicles. It will close most stores but leave some open as galleries or “information centers” in high-traffic areas.
“This is the only way to achieve the savings for this car and be financially sustainable,” Musk told reporters Thursday. “It is excruciatingly difficult to make this car for $35,000 and be financially sustainable.”
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