Happy Friday! I'm Chelsey Dulaney, giving you the rundown on markets as we head into the weekend.
This morning, we'll get the first read on U.S. second-quarter gross
domestic product. Economists expect it to be one of the strongest
quarters in years. Meanwhile, the earnings bonanza slows today though a
few big names including Twitter, Exxon Mobil and Chevron report this
Plus, I dive into a surprising earnings-season development: U.S.
exporters—the group investors worried were most exposed to the rise in
trade tensions—are logging the strongest growth.
Markets in a Minute
Global stock indexes mostly climbed Friday as investors remained
upbeat over the tentative trade detente between the U.S. and the
U.S. exporters are growing faster than companies that do most of their
business at home, a sign that trade spats and rising costs for things
like labor and commodities aren’t yet derailing the corporate profit
Firms with large overseas businesses have reported 12% growth in
revenue so far for the second quarter, according to Credit Suisse.
That’s nearly double the rate of growth for domestic-focused firms.
Exporters’ profit growth for the second quarter is also beating Wall
Street expectations. Earnings have jumped 23% from a year earlier, above
17% growth for domestic firms.
Investors have worried in recent months that tariff fights between the
U.S. and China, Europe and Canada would hurt multinational firms that
rely on overseas sales. Companies are also struggling with labor
shortages and higher costs for things like raw materials and
Those fears had encouraged investors to dump shares of exporters in favor of domestic-focused companies.
The Russell 2000 Index—composed of smaller firms with less foreign
exposure—is up 10% this year, compared to a 6.1% gain for the S&P
500 and 3.3% for the Dow Jones Industrial Average.
Earnings reports from companies including Honeywell International Inc.
and Boeing Co. indicate that strong economic growth is offsetting those
pressures for now.
During its earnings call this month, Honeywell described the impact of
tariffs as “minimal” while raising its 2018 sales guidance. Aviation
giant Boeing, whose shares have been hard-hit by tariff concerns this
year, on Wednesday boosted its revenue outlook amid strong global
“We’re not necessarily hearing companies voice an overwhelming amount
of concern about trade,” said Patrick Palfrey, an equity strategist at
Credit Suisse. “For all the concerns, demand is still there, consumers
are still opening up their wallets."
Facebook Inc. shed $119 billion
in market value on Thursday, likely the largest-ever daily loss of
value for a company. The drop dealt a blow to hedge funds: around 22% of
funds tracked by Goldman Sachs owned the stock.
The S&P 500 is just 1.2% off the record closing high it set in
late January. The Dow has further to go: the blue-chip index is 4.1%
below its January record.
On this day in 1694, the Bank of England opened for business in London to print currency and manage the national debt.