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Dow ends rocky month with rally on hopes for trade deal

CNBC logo CNBC 11/30/2018 Fred Imbert
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Stocks ended higher Friday after a Chinese official reportedly said the U.S. and China are finding common ground on trade ahead of a key meeting between President Donald Trump and Chinese President Xi Jinping.

The Dow gained 200 points, while the S&P 500 and Nasdaq added 0.8 percent.

Reuters reported that a Chinese official said "consensus is steadily increasing" in U.S.-China trade talks. The official added, according to the report, that differences between the two countries remained. The report sent stocks to their highs of the day, erasing earlier losses.

Jeff Powell, managing partner at Polaris Greystone Financial Group, said investors are taking a "wait-and-see approach" ahead of the meeting. "I don't think people are expecting too much of a change, but if we can get some sign of progress, that will help."

Trump and Xi are scheduled to have dinner on Saturday and are expected to discuss trade issues between the two countries. Investors are eagerly looking ahead to the dinner, hoping the two leaders can quell trade-induced volatility in the global economy and corporate earnings.

U.S. Trade Representative Robert Lighthizer said Friday he expected the meeting to be a "success," raising hope that a trade truce between the world's largest economies could be struck.

Caterpillar and Boeing rose 4.4 percent and 0.8 percent, respectively. These stocks are considered bellwethers for global trade because of their high exposure to foreign markets.

However, China hawk Peter Navarro, Trump's trade advisor, will attend the dinner between the two. Navarro is seen as a contentious figure in terms of Washington's trade relations with Beijing due to his aggressive stance on the world's second-largest economy. He clashed with White House economic advisor Larry Kudlow earlier this month after saying any deal with China would be "on President Donald J. Trump's terms, not Wall Street's terms."

Friday also marked the last trading day of November. Barring a major sell-off, two of the major indexes are on pace to post solid gains for the month. The Dow is up 0.9 percent in November, while the S&P 500 has risen 1 percent.

Heading into December, however, stocks could be in for more volatility, said Bruce Bittles, chief investment strategist at Baird.

"We do not have evidence that a meaningful cyclical low is in place, and the character of any rally attempts that do emerge will be watch closely," Bittles said in a note. He added, however, stocks have historically done well in December.

"December has a well-known history as being a strong month of the year for stocks," Bittles said. "In fact, it is the strongest month of the year for U.S. stocks on an absolute basis. Stocks have rallied over the course of the month about three quarters of the time."

The Dow is also on pace to register its biggest one-week gain since late 2016, while the S&P 500 is on track to post its largest weekly rise since February.

Shares of World Wrestling Entertainment traded 6.7 percent higher after J.P. Morgan Chase upgraded them to overweight from netural, noting the company's valuation is attractive compared to industry peers.

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