The S&P 500 increased 0.4% this week, extending its yearly gain to 11.8%, as shares of financial and technology companies outperformed. There was a lot of news for the market to digest, which included economic data, U.S-China trade updates, and geopolitics.
The Nasdaq Composite rose 0.9%. The Dow Jones Industrial Average and the Russell 2000, meanwhile, finished flat.
The S&P 500 financials (+0.8%), information technology (+1.0%), and energy (+1.1%) sectors outperformed the broader market. Conversely, the materials (-1.6%), real estate (-1.2%), and consumer staples (-0.4%) sectors underperformed.
Several key economic indicators helped tame buying interest this week, though.
December housing starts increased at the slowest pace (1.078 million) since September 2016; the advance estimate of Q4 GDP increased 2.6% (Briefing.com consensus 2.3%) but was still below the growth registered in the second and third quarters; and the ISM Manufacturing Index for February decreased to 54.2 (Briefing.com consensus 56.0) from January's reading of 56.6.
The positive news for investors, though, is that consumer confidence increased in February; moreover, the softer data could reinforce the Fed's "patient" stance on monetary policy.
Fed Chair Jerome Powell upheld that view in his semi-annual Congressional testimony on the economy this week. He also acknowledged the Fed is close to agreeing on a plan to end the balance sheet runoff.
In U.S-China trade news, President Trump officially delayed the March 1 deadline, as was anticipated, due to reported progress being made. Bloomberg reported Friday that the U.S. and China are in the process of preparing a document that lays out the provisions of a trade deal that could be signed perhaps as early as mid-March.
There were also some geopolitical developments that garnered some attention. President Trump abruptly ended a two-day summit with North Korean leader Kim Jong-un, unable to reach an agreement on the denuclearization effort. Separately, Pakistan shot down two Indian fighter jets over their contested border but returned a captured Indian pilot in goodwill.
In earnings news, retailers had a pretty good showing. Macy's (M), AutoZone (AZO), Lowe's (LOW), TJX (TJX), Best Buy (BBY), Gap (GPS), and Foot Locker (FL) all climbed on better-than-expected results. Home Depot (HD), too, had a solid fourth quarter but issued downside earnings guidance. The SPDR S&P Retail ETF (XRT) increased 2.3% this week.
U.S. Treasuries declined noticeably this week, sending yields higher across the curve. The 2-yr yield increased seven basis points to 2.55%, and the 10-yr yield increased 10 basis points to 2.76%. The U.S. Dollar Index lost 0.1% 96.46. WTI crude lost 2.5% to $55.81/bbl.