The Dow Jones Industrial Average traded 121 points higher as Nike outperformed. The S&P 500 was up 0.54 percent, led by gains in the health care and energy sectors. The Nasdaq Composite advanced 0.6 percent, led by gains in Amazon.
Stocks came off their highs following the release of disappointing economic data. The Institute for Supply Management released data showing U.S. manufacturing activity expanded at its slowest pace since November 2016. Meanwhile, the University of Michigan consumer sentiment index came in below expectations for February. The Atlanta Federal Reserve’s GDPNow model also showed an estimate of 0.3 percent for first-quarter GDP.
Friday’s moves come a day after the major indexes posted solid monthly gains in February, pushing the S&P 500 to its best start to a year since 1991. The S&P 500 is up more than 11 percent for the year, along with the Dow. The Nasdaq, meanwhile, is up more than 14 percent.
This could mean further gains for investors as the year goes on. Data compiled by LPL Financial show that, in 25 of 27 occasions since 1950, the S&P 500 has posted gains in the final 10 months after rising in January and February.
“We think equities have some room to go higher,” said Jeroen Blokland, a portfolio manager at Robeco. But “I don’t think we get another rally like that. It’s going to be a little bit more difficult. It could happen, but a lot of things would have to go right.”
Decreasing trade tensions between China and the U.S., along with a declining fears of tighter monetary policy from the Federal Reserve, helped propel stocks higher to kick off 2019.
Brendan McDermid | Reuters
That report came after White House economic advisor Larry Kudlow told CNBC the two countries are making “fantastic ” progress in their negotiations. Treasury Secretary Steven Mnuchin also told CNBC the two sides have “made a lot of progress. ”
But while stocks have been on a tear the first two months of the year, they have traded in a tighter range recently. The S&P 500 is on track to post muted gains for the week as it tries to break above 2,800, a key resistance level watched by investors.
“We know how prominent the 2,800 level has been, and it goes way beyond the last few days,” Frank Cappelleri, executive director at Instinet, wrote in a note. “In fact, this now is the 11th visit to the 2,800 zone since the start of 2018.”
“As we saw last summer, once 2,800 was officially overtaken, it became support. And that support helped propel the market to new highs,” he said.
Shares of Tesla dropped more than 8 percent after Tesla launched its standard Model 3 car, which starts at $35,000. However, analysts were unimpressed by the announcement. A Barclays analyst even called it the “un-iPhone moment. ”
Amazon shares rose more than 2 percent after The Wall Street Journal reported the company had plans to open its own grocery store chain at a lower price point that Whole Foods. Shares of Kroger took a beating on the news, sliding more than 4 percent.
—CNBC’s Sam Meredith contributed to this report.