UKX FTSE 100 Index

By Chris Matthews and Mark DeCambre, MarketWatch

The ISM manufacturing index showed the slowest pace of expansion in more than two years.

U.S. stocks rose Friday, though well off session highs, with early action colored by news that trade negotiations between Beijing and Washington may conclude as soon as two weeks, while new data on U.S. manufacturing disappointed, causing markets to pare early-morning gains.

How are benchmarks faring?

The Dow Jones Industrial Average gained 43 points, or 0.2%, to reach 25,952, while the S&P 500 index gained 8 points to 2,792, a rise of 0.3%. The Nasdaq Composite Index advanced 25 points, or 0.3%, to 7,558.

At session highs early Friday morning, the Dow had risen as much as 228 points, the S&P 500 rose 24 points, and the Nasdaq rallied as much as 60 points higher.

What's driving the market?

Market participants pointed to fresh hope of a conclusion to Sino-American trade negotiations in the coming week or two as among the factors likely supporting buying.

According to Bloomberg News (https://www.bloomberg.com/news/articles/2019-02-28/u-s-said-to-ready-final-china-trade-deal-as-hawks-urge-caution?srnd=premium-asia), U.S. officials were preparing for a summit between President Donald Trump and Chinese leader Xi Jinping, at which a 150-page agreement could be signed. However, during a news conference while abroad this week, the president emphasized his willingness to walk away if a favorable trade deal couldn't be struck.

On Wednesday, top trade negotiator Robert Lighthizer said that tariffs on $200 billion in Chinese goods set to increase to $25% from 10% at 12:01 a.m. March 2, wouldn't go into effect.

Meanwhile, in the U.K., the opposition Labour Party has confirmed it would support a second referendum on membership of the European Union, while Prime Minister Theresa May has agreed to allow Parliament to delay Brexit, which many analysts say raises the chances that the nation's withdrawal from the bloc will be put off past the March deadline.

On Thursday, data on U.S. gross domestic product showed that growth slowed to a pace of 2.6% in the fourth quarter. However, that figure was better than 1.9% expected by economists polled by MarketWatch economists. Investors have been debating the merits of the hotter-than-expected number against the backdrop of a trend of falling GDP from its mid-2018 peak at 4.2%.

What did the data show?

The Commerce Department reported that the PCE inflation index rose 0.1% in December, compared with the 0.4% increase in November, above economists estimates of a 0.4% decline, according to a MarketWatch poll. The 12-month change in prices remained steady at 1.9%.

It also said that consumer spending fell 0.5% in December, the largest amount since 2009 (http://www.marketwatch.com/story/consumer-spending-falls-off-a-cliff-in-december-posts-biggest-drop-since-2009-2019-03-01).

Meanwhile, the government reported that personal income rose 1% in December, above economists expectations of 0.4%, and above the 0.2% rise in November.

The Institute for Supply Management's manufacturing index fell to 54.2% in February (http://www.marketwatch.com/story/manufacturers-grow-at-slowest-pace-since-trumps-election-in-fall-2016-ism-finds-2019-03-01), below economists expectations of 55.5%, according to a MarketWatch poll of economists. It also marked the slowest pace of growth since the election of President Trump in November 2016

Markit's manufacturing PMI also disappointed, coming in at 53.0 in February, after hitting 53.7 in January.

Consumer sentiment came in below economists' expectations (http://www.marketwatch.com/story/university-of-michigan-consumer-sentiment-reading-misses-expectation-2019-03-01), with the University of Michigan's index came in at 93.8, versus expectations of 95.6, per a MarketWatch survey of economists.

What are strategists saying?

"Both of the US manufacturing PMIs dramatically undershot expectations," Connor Campbell, financial analyst with SpreadEx wrote in a Friday note. "Granted, these numbers are a lot better than what was posted by the UK, China and the Eurozone -- the latter 2 regions saw their respective manufacturing sectors stuck in contraction territory -- earlier in the day, but they are nevertheless cause for concern," he added.

It was these disappointing figures that helped put pressure on stocks Friday morning, causing them to fall "well off the 170 point rise suggested by the futures before the PMIs were released," he wrote.

Which stocks are in focus?

Shares of Gap Inc. (GPS) were in focus after the giant clothing retailer said late-Thursday that it was splitting into two publicly trade companies and closing some 200 stores. The stock surged 18.6% Friday.

Foot Locker Inc. shares(FL)were in focus Friday (http://www.marketwatch.com/story/foot-locker-shares-soar-185-premarket-after-blowout-earnings-2019-03-01), after the sporting goods and apparel retailer blew past earnings estimates for its fiscal fourth quarter. The stock rose 6.1% Friday morning.

Shares of Immunogen Inc. (IMGN) are under pressure Friday, after the company said a phase 3 trial of its ovarian cancer treatment, mirvetuximab soravtansine, compared with chemotherapy, failed to meet its primary endpoint (http://www.marketwatch.com/story/immunogens-stock-loses-nearly-half-its-value-after-trial-of-cancer-treatment-fails-to-meet-primary-endpoint-2019-03-01) of progression free survival. The sock fell 48.7% Friday.

Shares of Tesla Inc. (TSLA) fell 7.4% early Friday, after the electric-car manufacturer announced (http://www.marketwatch.com/story/tesla-launches-35000-shorter-range-model-3-2019-02-28) Thursday evening that it is likely to report a loss in the fourth quarter, contrary to previous predictions. Tesla also announced that it would offer its Model 3 for $35,000 dollars, while saying it would layoff employees to cut costs.

Dentsply Sirona Inc. (XRAY) stock surged 14.9% Friday, after the maker of dental products and technologies beat analyst estimates (http://www.marketwatch.com/story/dentsply-sirona-earnings-top-estimates-2019-03-01) for fourth-quarter earnings and sales.

Shares of Walgreens Boots Alliance Inc. (WBA) fell 4% Friday, after the drugstore chain said (http://www.marketwatch.com/story/walgreens-stock-sinks-to-lead-dow-losers-as-reimbursement-headwinds-generic-deflation-pressures-continue-2019-03-01) it continues to face reimbursement headwinds, as well as pressure from falling prices for generic drugs.

How did stocks trade yesterday?

On Thursday (http://www.marketwatch.com/story/dow-sp-500-set-for-3-day-skid-as-wall-street-awaits-fourth-quarter-gdp-2019-02-28), the Dow fell 69.16 points, or 0.3%, to 25,916; the S&P 500 index shed 7.89 points, or 0.3%, to 2,784.49; and the Nasdaq Composite Index declined 21.98 points, or 0.3%, to 7,532.53.

All indexes rose for a second month in a row, with the Dow rallying 3.7% in February, the S&P 500 up 3% and the Nasdaq gaining 3.4%.

What's happening in other markets?

Stocks in Asia rose Friday on trade optimism; Japan's Nikkei 225 , Hong Kong's Hang Seng Index , and China's Shanghai Composite Index all closed higher.

In Europe, stocks closed, with the Stoxx Europe 600 rising in Friday trade, buoyed by German stocks, where the Dax (DAX) was rising 0.9%.

In commodities markets, the price of oil was edging lower, while gold prices were retreating. The U.S. dollar rose 0.1%.

(END) Dow Jones Newswires

March 01, 2019 11:29 ET (16:29 GMT)

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