Stocks pared gains late Friday but the market still made positive signals as indexes rallied on positive sentiment on the U.S.-China trade war.
XThe S&P 500 gapped up and ended 1.1% higher, and the Nasdaq composite surged 1.3% as both indexes leapt back above their 50-day moving averages.
The move above those price trend indicators was as positive a sign as the stock market could expect. It removes one technical price ceiling on the market, although indexes left a significant chunk of the session's gains on the table. Wall Street remains sensitive to trade headlines, too.
The Dow Jones Industrial Average, which had already topped its 50-day line Thursday, added 1.2%. Volume rose, according to unconfirmed data. Breadth was the strongest in at least some weeks. Advancing stocks topped decliners by more than a 3-to-1 ratio on the NYSE and Nasdaq.
Invesco QQQ Trust (QQQ), the most popular ETF to trade the Nasdaq, climbed 1.3%. It also closed above the 50-day line a day earlier.
Small Caps Beat S&P 500
Small caps made a splash of their own, as the Russell 2000 bolted 1.8% in outperforming the other indexes. The Russell 2000 closed back at its 50-day line.
Optimism on trade talks ignited stocks early Friday. In the afternoon, Bloomberg reported there was agreement between the U.S. and China on a partial pact that lays the groundwork for a broader agreement. And President Donald Trump said the two sides had reached agreement on an initial deal that's part of a multiphase accord.
Innovator IBD 50 ETF (FFTY) rose 1.2%, with nearly all 50 stocks up on the day. Only a batch of defensive-aimed companies such as real estate investment trusts and gold miner Kirkland Lake Gold (KL) were lower. Qiwi (QIWI), the Eastern European payments company, fell 5%. Reports said Qiwi plans to sell part of its credit portfolio.
Several breakouts added to the session's bullish overtones, among them some institutional-quality consumer stocks.
Garmin (GRMN) broke out of a cup-with-handle base, but volume was below average. The maker of navigation and tracking devices also has a relative strength line that has not hit new highs yet.
VF Corp. (VFC) rose past the 91.45 buy point of another cup with handle. Volume was below average, and shares closed below the entry. Rent-to-own furniture chain Aaron's (AAN) broke out of a flat base, clearing the 68.54 proper buy point in heavy volume.
In the building sector, Fastenal (FAST) roared 17% and cleared the 34.19 buy point of a cup with handle in big volume. The maker of building products beat profit expectations earlier today.
Juan Carlos Arancibia is the Markets Editor of IBD and oversees our market coverage. Follow him at @IBD_jarancibia
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