Stocks were mixed at market close Friday but ended the third quarter on a high note.
The S&P 500 (^GSPC) was little changed, down 0.02 points at the end of trading on Friday. The Dow (^DJI) ticked up 0.07%, or 18.38 points, while the Nasdaq (^IXIC) rose 0.05%, or 4.38 points.
Even amid political turmoil at home and abroad, U.S. markets were strong in the third quarter, which ended Friday. The S&P 500 rose about 7%, its largest quarterly advance since the fourth quarter of 2013. The Dow is up more than 9% for the quarter, and the Nasdaq is up about 7%, marking its ninth consecutive quarter of gains.
“Savvy investors have looked past the dysfunction and instead have focused on the fabulous economic fundamentals that have propelled the stock market to record highs,” Greg Valliere, Horizon Investment’s chief global strategist, wrote in a note. “Along the way, there have been partisan issues that investors do have to follow – trade, deficits, tax policies, etc. But the Kavanaugh hearings, the Trump tweets, and the political ugliness have not moved the markets.”
Trade tensions have shown few signs of loosening between the U.S. and some of its biggest economic partners. The latest imposition of 10% tariffs on $200 billion worth of Chinese goods rolled out Monday, with China hitting back with levies on $60 billion of U.S. products. A cooling of tensions between the countries seems remote for the near-term. Meanwhile, the U.S. and Canada have struggled to come to a negotiation that would include the latter in a revised North American Free Trade Agreement.
In Europe, Italy’s government, backed by the populist 5-Star Movement and the League parties pushing for funding for costly policy promises, widened its budget deficit target Thursday to 2.4% of gross domestic product for 2019. This diverged from the intentions of finance minister Giovanni Tria, who had sought a deficit of as low as 1.6% to help corral some of the country’s high debt. Italian assets fell on the news and Italy’s FTSE MIB index sank, intensifying concerns about European markets. Italy is the fourth largest economy in the European Union, accounting for about 11.2% of the region’s GDP.
STOCKS: Tesla tumbles, Facebook discovers major breach
Elon Musk, CEO of Tesla, has been sued by the Securities and Exchange Commissionfor fraud over statements he made in August about his intentions to bring the car-making company private. Musk’s initial Twitter post about having “funding secured” to bring Tesla private at $420 per share had sent the stock surging. The suit seeks to bar Musk from serving as an officer or director of a public company and disgorge ill-gotten gains. Musk and his lawyers had reportedly come to a settlement agreement before the SEC filed its complaint, but at the last minute decided to fight the case.
Shares of Tesla (TSLA) plunged following the complaint and were down 13.9% to $264.77 per share at market close Friday.
Facebook (FB) shares slid after the company announced it had found a security breach earlier this week that affected nearly 50 million accounts. Hackers were able to take over users’ accounts after exploiting a vulnerability in the site’s code for its “View As” feature, letting them steal Facebook access tokens. Facebook said in a statement that it discovered the breach Tuesday and has since fixed the vulnerability, informed law enforcement and reset the access tokens of the affected accounts. The company is also temporarily turning off its “View As” feature as it conducts a security review. Shares of Facebook fell about 3.5% on the news Friday afternoon but pared some losses by market close.
Shares of BlackBerry (BB) climbed after the company posted quarterly results that topped Wall Street expectations. The company reported adjusted earnings of 4 cents per share on revenues of $214 million, exceeding average estimates of earnings of 1 cent per share on revenues of $210 million, according to data compiled by Bloomberg. Executives for BlackBerry, which has pivoted from being predominantly a smartphone vendor to providing software for managing mobile devices, said that the company expects software and services revenue to climb 8 to 10% for the full year. The stock closed up 11.7% to $11.38 per share.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 21, 2018. REUTERS/Brendan McDermid
NEWS: Senate Judiciary Committee votes to sends Kavanaugh nomination to Senate floor
The Senate Judiciary Committee voted to advance Brett Kavanaugh’s Supreme Court nomination to the Senate floor. The advancement follows a day of emotionally charged testimony from Kavanaugh and Christine Blasey Ford, who accused him of sexual assault while the two were in high school. GOP Senator Jeff Flake on Friday called for a one-week delay of the full Senate vote to allow the FBI to investigate the allegations.
Global mergers and acquisitions fell 35% in the third quarter from the quarter prior to $783 billion. The decline in M&A follows intensifying tensions between the U.S. and China over trade, leading to financial and regulatory uncertainty for some deals.
Slack, a company that makes communication software for workplaces, is preparing to go public as soon as the first quarter of 2019, the Wall Street Journal reported, citing people familiar with the plans. The IPO could lead to a valuation around $7 billion.
Online streaming service Netflix (NFLX) intends to grow its presence in France and will produce 14 new French shows and television series, or twice as many as previously announced, CEO Reed Hastings said Friday. Netflix will also launch a Paris bureau, marking the media company’s third major European outpost.
ECONOMY: Core PCE sits at 2.0%
Personal consumption expenditure price index (PCE), excluding food and energy components, were unchanged from July, rising 0.2%. Year-over-year increases in the core PCE price index – the preferred measure of inflation by the Federal Reserve – remain at 2.0%, which was in line with analyst forecasts.
“On the whole, the August PCE report supports our assessment that inflation has firmed, with core PCE inflation on track to end the year at 2.0%,” Morgan Stanley economists wrote in a note following the release of the latest results.
Personal spending, which accounts for more than two-thirds of the country’s economic activity, rose 0.3% in August, matching average analyst expectations. When adjusted for inflation, however, personal spending rose 0.2%, the weakest rate since February.
Personal income in the U.S. rose 0.3% in August, falling short of expectations of a 0.4% rise. This marked the same rate in personal income as in July.
The University of Michigan’s consumer confidence index increased to 100.1 for September from 96.2 the month prior, with gains from households with incomes in the bottom third buoying levels overall. The index topped 100.0 for just the third time since January 2004, Surveys of Consumers Chief Economist Richard Curtin wrote in the release.
