Stocks were able to overcome mostly bad data from the U.S. and China and generally negative media reports around the state of the U.S.-China trade relationship as investors were given hope by the reported delay in auto tariffs and signals that the U.S. could soon reach an agreement with Mexico and Canada that would lift steel and aluminum tariffs. The easing in tensions with Europe and North American allies was encouraging given worries that the trade fight with China could be protracted. Earnings from Macy's (M) and Alibaba (BABA) were also better than expected, though the reactions of both stocks was muted as both companies are subject to concerns about how they may be impacted by a long fight between the U.S. and China.
ECONOMIC EVENTS: In the U.S., retail sales fell 0.2% overall in April, with a scant 0.1% gain in the ex-auto component, both of which were weaker than forecast. Industrial production fell 0.5% in April, with capacity dipping to 77.9%. Business inventories were flat in March, with sales climbing 1.6%, as expected. The NAHB housing market index rose 3 points to 66 in May, which was better than expected. The Empire State manufacturing index was also better than expected, increasing 7.7 points to 17.8 in May.
In China, fixed asset growth slowed to 6.1% year-over-year in the year to April from 6.3% growth in the previous release. Industrial production growth slowed to 5.4% year-over-year from 8.5% previously. Retail sales growth decelerated to 7.2% year-over-year from 8.7%.
In trade news, the Wall Street Journal's Josh Zumbrun reported that U.S. Treasury Secretary Steven Mnuchin told a Senate Appropriations subcommittee that the Trump administration is making progress in resolving steel and aluminum tariffs that were applied to Canada and Mexico.
TOP NEWS: President Trump is expected to delay a decision to impose tariffs on auto imports by up to six months in an attempt to avoid blowing up negotiations with Europe and Japan, both CNBC and Bloomberg have reported, citing people close to the discussions. Trump faces a May 18 deadline over how to proceed with his threat to impose a tariff of as much as 25% on imported cars and parts in the name of U.S. national security, the reports noted. Publicly traded automakers that moved up following the headlines regarding the delay decision include Fiat Chrysler (FCAU), Ford (F), General Motors (GM), Honda (HMC), Toyota (TM) and Volkswagen (VWAGY).
Macy's slid fractionally even though the retailer reported better than expected earnings for the first quarter, with CEO Jeff Gennette telling investors that the company is "off to a solid start this year." The company also backed its fiscal year profit outlook, but acknowledged on the associated earnings call that a fourth tranche of China tariffs that has been threatened by President Trump, if enacted, would impact Macy's private and national brands and wasn't contemplated in guidance.
Meanwhile, Alibaba shares rose 1.6% after it reported better than expected quarterly earnings. Like Macy's, though, some earnings call comments took some energy out of the stock's momentum. In the case of Alibaba, the comments pointed to for short-circuiting the rally were the CEO stating that the company doesn't plan to expand its recommendation feed monetization at this time.
MAJOR MOVERS: Among the noteworthy gainers was Beyond Meat (BYND), which rose 9.1% after the Financial Post reported that Restaurant Brands' (QSR) Tim Hortons will be testing three breakfast options made with Beyond Meat's meatless patty. Also higher were shares of Restaurant Brands, which gained 0.6% after the parent of Tim Hortons and Burger King held its analyst day event, at which it discussed expansion plans.
Among the notable losers was ImmunoGen (IMGN), which declined just over 32% after the FDA recommended a new Phase 3 trial to evaluate the safety and efficacy of mirvetuximab soravtansine. Also lower was Agilent (A), which fell 11% after reporting quarterly results.
INDEXES: The Dow rose 115.97, or 0.45%, to 25,648.02, the Nasdaq gained 87.65, or 1.13%, to 7,822.15, and the S&P 500 advanced 16.55, or 0.58%, to 2,850.96.