The S&P 500 racked up solid gains Friday to close above a key level, shrugging off data pointing to slowing U.S. economic and global growth as hopes of a U.S.-China trade deal kept risk appetite alive.
The Dow Jones Industrial Average rose 0.43%. The S&P 500 added 0.69%, closing above 2,800 for the first time since Nov. 8. The Nasdaq Composite gained 0.83%.
As Wall Street got a new month underway, traders were reminded there remain headwinds that could hinder the path to swashbuckling gains. One of the biggest: The U.S. economy continued to show signs of a slowdown.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, fell 0.5% in December. ISM manufacturing data for February missed expectations of 55.5.
The fall in personal spending represented "the biggest decline since 2009 and serves to give more credence to the abysmal retail sales figure released a couple weeks ago," BMO said in a note.
The consumer exhibiting "significant trepidation" going into year-end is more than sufficient to keep the Federal Reserve on the sidelines for the time being, the bank added.
The downbeat data arrived after China's economy showed a fall in factory activity for the third month in a row. However, the pace of the slowdown had moderated, raising hopes a bottom was forming.
Sentiment on Wall Street was boosted by signs that U.S. and Chinese negotiators are closer to reaching a trade agreement.
"We made so much progress last week when the Chinese were here," National Economic Council Director Larry Kudlow told Fox Business Friday. "The agreements made last week represent tremendous progress on IP theft, on forced technology transfer, on ownership, on cyber interference and, maybe most importantly, on enforcement."
Beyond trade, the markets were powered by a rise in energy stocks despite a fall in oil prices on signs of weakness in China's economy.
Retailers also led the charge for the major averages thanks to a rally in retailer Gap.
Gap (NYSE:GPS) said Thursday it would split into two companies, spinning off its fast-growing budget brand Navy into a separate firm. The other company, which has yet to be named, will include the Gap brand, Athleta, Banana Republic, Intermix and Hill City. The news arrived as the retailer revealed mixed results, beating estimates from on the bottom line, but missing on the top line.
In other company news, Amazon.com (NASDAQ:AMZN) reportedly plans to open dozens of grocery stores, with Los Angeles touted as the location of the first store, The Wall Street Journal reported. The news sent shares of Kroger (NYSE:KR) sliding 4.47%.
Top S&P 500 Gainers and Losers Today:
Dentsply Sirona (NASDAQ:XRAY), Gap (NYSE:GPS) and Masco (NYSE:MAS) were among the top S&P 500 gainers for the session.
Walgreens Boots Alliance (NASDAQ:WBA), Nektar Therapeutics (NASDAQ:NKTR) and Kroger (NYSE:KR) were among the worst S&P 500 performers of the session.
