U.S. equities moved higher on Friday as they continued the recovery from Wednesday’s Trump-related wipeout as chatter of impeachment fade. As a reminder, the political media had been alight with reports that President Trump had sought to impose his will into former FBI director James Comey’s investigation into former National Security Advisor Michael Flynn’s alleged connections to Russia and Turkey.
Many saw this as bordering on obstructing justice. And thus, the big-time response. With the Department of Justice appointing a special council to look into the matter, and with Trump off on his first foreign trip as president, cooler heads are now prevailing.
The catalyst for the original wipeout, concern that Trump’s pro-growth legislative agenda will be stalled, still hangs in the air however. Despite the “buy the dip” mentality on display.
In the end, the Dow Jones Industrial Average gained 0.7%, the S&P 500 wafted up 0.7%, the Nasdaq Composite gained 0.5% and the Russell 2000 added 0.5%. Treasury bonds were little changed, the dollar was under pressure again (and has fully reversed its post-election gains), gold rose slightly and crude oil rose 2.0% on reports of a bigger and/or extended production cut agreement from OPEC next week.
Breadth was heavily positive, with 3.2 advancers for every declining issue on the NYSE. Volume was heavy, at 114% of the 30-day average. Industrial stocks led the way with a 1.4% gain followed by energy, up 1.2%. Healthcare was the laggard, down 0.3%.
Deere & Company (NYSE:DE) gained 7.3% on a big quarterly earnings beat despite a lower-than-expected equipment sales number. Forward guidance was strong. Ross Stores, Inc. (NASDAQ:ROST) climbed 1.9% on a top- and bottom-line beat with strong guidance despite a challenging retail backdrop.
On the downside, Foot Locker, Inc. (NYSE:FL) lost 16.7% on an earnings, revenue, and margin miss driven by a 0.5% decline in same-store sales.
While the medium-term outlook still looks dicey — with technical measures rolling over, breadth still narrowing, and fundamentals like economic growth uneven and tepid — we could be on the cusp of a short-lived relief rally over the next week or two.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. A two-week and four-week free trial offer has been extended to Investorplace readers. Redeem by clicking the links above.