Wall Street opens on a high note amid renewed hope about trade

US stocks were upbeat at the open on Friday, amid new positive signs that Washington and Beijing are moving towards at least a partial deal to end the lingering trade conflict.

White House economic adviser Larry Kudlow said late Thursday the sides have made “enormous progress” on an agreement although it is not yet final.

After weeks of conflicting statements, including President Donald Trump throwing cold water on the claim that he had agreed to roll back some of the tariffs imposed on China, Kudlow’s latest comment was enough to buoy investors.

About 15 minutes into the trading day, the Dow Jones Industrial Average had gained 0.4 per cent to 27,881.87.

The broader S&P 500 added 0.4 per cent to 3,107.72 − pushing past the latest record set Thursday − and the Nasdaq had risen nearly 0.5 per cent to 8,516.97.

“Apparently, close is enough,” Briefing.com analyst Patrick O’Hare wrote about the reaction to Kudlow’s optimism.

But he noted that more concerning comments in recent days never really stalled the equities rally.

“In the market’s mind, then, it never gave up on the idea that a deal could be close. If it had, there would have been a sea of red across the performance tables,” he said.

China’s Commerce Ministry on Thursday said the lifting of tariffs imposed by President Donald Trump was a “condition” to reaching the preliminary deal announced last month − suggesting a deal is not imminent.

Markets got a mixed picture from economic data, including a 0.3 gain in retail sales, which masked declines in some product categories, and a bigger-than-expected drop in industrial production, hurt by the lengthy General Motors strike.

Separately, London stocks slid on Friday, bucking gains elsewhere, after Britain’s opposition Labour Party vowed to nationalise parts of telecoms giant BT and offer free broadband internet in an eye-catching election promise.

Labour leader Jeremy Corbyn, hitting the campaign trail in the city of Lancaster in northwestern England, said he would bring the parts of BT that deal with broadband into public ownership as part of a sweeping programme of nationalisations.

BT shares dived 3.7 per cent in morning deals but then later recovered somewhat, while dealers digested news that BT’s broadcasting division had been awarded exclusive broadcast rights to UEFA’s European football matches until 2024.

The American consumer came to the rescue again in October, boosting spending on cars, gasoline and food, and reversing the decline in the prior month, according to new data released on Friday.

But the overall gain masked falling purchases of furniture, clothing, electronics and building materials, which could be a worrying sign heading into the year-end holiday shopping season and a drag on US growth in the fourth quarter.

Retail sales rose 0.3 per cent compared to September, to $526.5 billion — 3.1 per cent higher than October 2018, the Commerce Department reported. The monthly gain was slightly better than the median forecast.

But excluding autos, the gain was just 0.2 per cent in the month — half the gain economists expected — and if gasoline is also removed from the total, the increase is an even more modest 0.1 per cent.

The American consumer is almost single-handedly sustaining the US expansion as the economy in the rest of the world slows and President Donald Trump’s trade wars eat into US exports, business investment, manufacturing and agriculture.

Sales of autos and parts rose 0.5 per cent to $105.6 billion, while sales at gasoline stations jumped 1.1 per cent from September to $43 billion, the report said.

But clothing sales dropped 1.0 percent, furniture sales fell 0.9 percent, electronics declined 0.4 per cent.

Online sales, which have consistently been a strong and rising feature of retail sales, gained 0.9 per cent and has risen more than 14 per cent compared to last year.

US industrial production fell faster than expected in October as output for the manufacturing, mining and utilities sectors all fell.

The Federal Reserve said on Friday industrial production declined 0.8% last month after an upwardly revised 0.3% decline in September. It was the largest decline since May of 2018.

Economists polled by Reuters had forecast industrial production falling 0.4% last month after a previously reported 0.4% percent drop in September.

Manufacturing output fell 0.6% last month, driven by an 11.1% drop in motor vehicle production. U.S. producers assembled cars and trucks in October at an annual rate of 9.14 million units, down 2.5 million since a recent peak in July.

The strike at General Motors added to that decline, contributing to a 1.2% drop in durable goods output, the Fed reported.

But excluding motor vehicles and parts, US manufacturing production still fell 0.5%, the Fed said, and durable goods still dropped 0.2%.

Production rose 0.1% for computers and related products, but output for communications equipment fell 0.4%.

Agencies