U.S. equities held onto gains at market close as strong earnings from several major companies helped offset concerns of ongoing trade tensions, decelerating global growth and the partial government shutdown.
The S&P 500 (^GSPC) rose 0.22%, or 5.8 points, as of market close. The Dow (^DJI) rose 0.7%, or 171.14 points, after shedding about 100 points earlier in the session. The Nasdaq (^IXIC) rose 0.08%, or 5.41 points.
A host of major companies exceeded Wall Street’s expectations in their most recent earnings results, helping to buoy their shares and stimulate investors’ interest in equities. IBM (IBM) rose about 8% Wednesday morning after reporting better-than-expected fiscal fourth quarter results after-hours on Tuesday and posting a positive forecast for 2019.
Peer Dow component Procter & Gamble (PG) shares gained after the consumer goods company reported fiscal second-quarter earnings and sales that beat estimates and raised the upper end of its 2019 sales growth forecast. United Technologies (UTX) likewise reported that it expects its revenue and profits to rise this year amid the company’s previously announced split into three separate businesses.
Meanwhile, investors have been whipsawed by a host of trade-related headlines, many of which have provided conflicting accounts about the direction of future negotiations. Most recently, White House economic adviser Kevin Hassett said on Wednesday that he believes the U.S. and China could reach a trade deal ahead of the March 1 deadline, when the current hold on additional tariffs lifts.
“Yes, I am confident that it can happen, that the talks are moving forward,” Hassett said during an interview with CNN. “There’s a lot of progress to be made, but it’s a very strong situation right now. And I think the Chinese recognize that they’ve got a big potential gain for coming up with a deal because as you mentioned their growth has really fallen off the cliff.”
Hassett’s comments come following official data from China earlier this week showing that the country’s economy grew at a pace of 6.6% in 2018, the slowest since 1990. And also earlier this week, the International Monetary Fund released a revised World Economic Outlook report cutting global growth projections for 2019 and 2020 due to a confluence of concerns including trade tensions and Brexit uncertainty.
Hassett also acknowledged that the U.S. gross domestic product growth will be impacted by the ongoing government shutdown. When asked by CNN’s Poppy Harlow whether we could “get zero growth” if the shutdown persists through the first quarter of 2019, Hassett said, “Yes, we could.”
Concerns of the government shutdown to the economy and eventually to equities have already been on the minds of private sector leaders. JPMorgan (JPM) CEO Jamie Dimon asserted last week during a call with investors discussing the bank’s quarterly results that a protracted shutdown “could reduce growth to zero.” Economists from the firm downwardly revised their first quarter GDP outlook to 2% from 2.25% in a note published Jan. 10 due to impact from the shutdown.
The U.S. Senate on Thursday is set to vote on two rival proposals aimed at reopening the government, which has now been partially closed for more than a month. However, each proposal – with one backed by Republicans and the other backed by Democrats – is expected to fail since either would require 60 votes in order to advance.
