Stocks rise, capping another up week. Gap soars, and Tesla sinks

Healthcare and technology companies helped lift U.S. stocks Friday, breaking a three-day losing streak for the Standard & Poor’s 500 and giving the benchmark index its fifth weekly gain in a row.

Renewed optimism for a potential resolution to the U.S.-China trade conflict helped put investors in a buying mood following a Bloomberg story saying U.S. officials are preparing a deal that could be signed within a month.

Meanwhile, Gap surged after saying it plans to spin off its Old Navy brand. Tesla sank after Chief Executive Elon Musk warned that the electric car maker is unlikely to see a profit this quarter and announced that most of its showrooms will close.

The S&P 500 climbed 19.20 points, or 0.7%, to 2,803.69. That’s the index’s first close above 2,800 points since Nov. 8. It has notched a weekly gain in nine of the past 10 weeks.

The Dow Jones industrial average rose 110.32 points, or 0.4%, to 26,026.32. The Nasdaq composite climbed 62.82 points, or 0.8%, to 7,595.35. The Russell 2000 index of smaller companies advanced 14.09 points, or 0.9%, to 1,589.64. Major indexes in Europe also finished higher.

The U.S. stock indexes got off to a strong start early Friday, then lost ground after a report showed manufacturing growth slowed in February. But that pullback didn’t last, a reflection of how traders have remained confident in the strength of the U.S. economy despite weak economic reports.

Consumer spending in December took its biggest tumble in nine years. Disappointing retail sales are another sign that growth slowed at the end of 2018.

In recent months, though, investors’ jitters over trade and signs of a slowing global economy have been eased by confidence in the prospects for steady U.S. growth and an increasingly hands-off Federal Reserve. That has fueled the market’s strong start to this year following its steep sell-off at the end of 2018.

“Clearly, the [U.S.-China] tariffs negotiations are moving in the right direction, as far as the market is concerned, and that’s positive,” said Quincy Krosby, chief market strategist at Prudential Financial. “The other positive is that the Fed remains on hold and they have been telegraphing that they remain patient on interest rate hikes.”

Optimism over a potential U.S.-China trade deal marked a change from earlier in the week, when U.S. Trade Representative Robert Lighthizer raised doubts about progress in the talks.

The market’s recent gains already reflect investors’ optimism for a U.S.-China deal, but stocks could get a further boost from an official resolution to the dispute, said Eric Wiegand, senior portfolio manager for Private Wealth Management at U.S. Bank. “If we were able to see a successful conclusion to the negotiations, that could be a near-term catalyst,” he said.

Healthcare and technology companies accounted for much of the market’s gains Friday. Celgene rose 3.4%. Western Digital gained 2.7%.

Company earnings and deal news also caught investors’ attention.

Gap surged 16.2% after it announced that it will spin off its thriving Old Navy brand into a separate company. The apparel retailer will retain its struggling namesake brand, along with Banana Republic and others, in a new, as-yet unnamed company.

Several supermarket operators declined after the Wall Street Journal reported that Amazon plans to open dozens of grocery stores in several U.S. cities. The e-commerce giant has been making a big push into physical stores, buying up the Whole Foods grocery chain in 2017 and opening cashier-less convenience stores around the country.

Amazon shares climbed 1.9%. Supermarket operator Kroger slid 4.5%. Walmart, which also sells groceries, dropped 1.1%. Sprouts Farmers Markets slipped 0.5%.

Foot Locker advanced 6% after the footwear and athletic apparel retailer blew past investors’ fourth-quarter expectations and forecast double-digit profit growth for this year.

Tesla tumbled 7.8%. Alongside Musk’s profit warning and the coming showroom closures, the automaker began selling a $35,000 version of its Model 3, which previously cost at least $42,900.

Caesars Entertainment rose 4.1% after the casino operator said it would replace three board members with directors chosen by billionaire activist investor Carl Icahn.

U.S. crude slid 2.5% to $55.80 a barrel. Brent crude, used to price international oils, fell 1.9% to $65.07 a barrel.

Bond prices fell. The yield on the 10-year Treasury note rose to 2.76% from 2.71%.

The dollar rose to 112.01 yen from 111.42 yen. The euro weakened to $1.1357 from $1.1379.

Gold fell 1.3% to $1,299.20 an ounce. Silver dropped 2.4% to $15.26 an ounce. Copper fell 0.5% to $2.93 a pound.

Wholesale gasoline fell 1.3% to $1.73 a gallon. Heating oil fell 1.3% to $2 a gallon. Natural gas rose 1.7% to $2.89 per 1,000 cubic feet.