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S&P 500 crosses 3,300 on upbeat Morgan Stanley earnings, retail data

Kitco News

Sruthi Shankar

(Reuters) - The S&P 500 crossed the 3,300 mark for the first time and other stock indexes hit record highs on Thursday, as encouraging retail sales data and upbeat Morgan Stanley earnings fueled a rally following the signing of an initial U.S.-China trade deal.

The Wall Street bank (MS.N) jumped 7.6% to the top of the S&P 500 after it beat quarterly profit estimates and raised its performance goals, closing out big U.S. lenders’ earnings on a strong note.

The sentiment was further lifted by data that showed U.S. retail sales rose 0.3% in December, in-line with economists’ estimates.

The numbers indicated the U.S. economy maintained a moderate growth pace at the end of 2019 and eased concerns about the health of the sector following disappointing holiday sales reports from Target Corp (TGT.N) and J.C. Penney Co Inc (JCP.N).

“The consumer needs to be strong and evidence of that is retail sales, which came in pretty well after some slowing over the last several months,” said Tom Martin, portfolio manager at Globalt in Atlanta.

Technology stocks .SPLRCT, which have fueled the recent rally, provided the biggest support. Microsoft Corp (MSFT.O) rose 1% and chipmakers gained after a strong forecast from the world’s top contract chipmaker TSMC (2330.TW) (TSM.N).

Stock markets hit new highs after Washington and Beijing on Wednesday signed a deal that paused an 18-month long tariff war that had bruised financial markets and crimped global growth.

China is expected to boost purchases of U.S. goods and services in exchange for the rolling back of some tariffs as part of the deal, but several thorny issues remain unresolved.

“We’re in that environment where investors say - we’ve got low yields and a potentially re-accelerating economy and an earnings growth that is looking to be somewhere between 5% and 9%,” said Martin.

Analysts expect profits at S&P 500 companies to have dropped 0.4% in the fourth quarter, but full-year 2020 earnings are estimated to grow 9.6%, according to Refinitiv IBES data.

At 11:50 a.m. ET, the Dow Jones Industrial Average .DJI rose 0.59% to 29,200.67. The S&P 500 .SPX gained 0.52% to 3,306.51 and the Nasdaq Composite .IXIC was up 0.60% at 9,314.10.

Among other stocks, Signet Jewelers Ltd (SIG.N) soared 38.4% after raising 2020 adjusted earnings estimate.

Bank of New York Mellon Corp (BK.N) slipped to the bottom of S&P 500, down 7.8%, after the custodian bank missed profit estimates.

Advancing issues outnumbered decliners by a 2.81-to-1 ratio on the NYSE and a 2.78-to-1 ratio on the Nasdaq.

The S&P index recorded 83 new 52-week highs and no new low, while the Nasdaq recorded 169 new highs and three new lows.

Reporting by Sruthi Shankar and Susan Mathew in Bengaluru; Editing by Sriraj Kalluvila

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