The S&P 500 notched its best week since mid-July after investors took the U.S.’s latest overture to China as a sign that trade tensions may be receding. Booming economic growth and a run of strong corporate profits have supported stocks in the U.S.
But many indexes around the world have struggled with a slowdown in economic expansion and a stronger dollar. The dollar’s recent rise has showed signs of stalling, relieving some of the pressure on emerging-market economies and multinational corporations.
Even after a rally Friday, the U.S. dollar has stalled near its lowest levels since late August. The currency has been weighed down recently, in part, by worries over an expected rise in the country’s trade and budget deficits. Further declines could ease pressure on multinational corporations whose earnings have suffered because they need to convert foreign profits into dollars, while boosting exporters by making their products more competitive abroad.
Energy stocks rose alongside oil prices last week. The gains left the S&P 500 energy sector roughly flat for the month, as traders prepare to weigh weekly U.S. inventory data and figures pointing to rising production from the Organization of the Petroleum Exporting Countries. Some analysts think fallout from Hurricane Florence could also affect demand for energy products.
Recent gains in software firms including
have helped the technology sector trim some of its month-to-date losses and offset declines in chip makers. Investors will monitor earnings from Oracle,
in the coming week to see if fresh results can further boost the market’s best-performing sector.
Analysts estimate S&P 500 companies will boost third-quarter earnings 20% from a year earlier. That would be the third-fastest-ever quarterly growth rate, trailing just the two previous quarters, according to FactSet. Estimates are projected to come down next year, as the effects of the corporate tax cut fade.
—Ira Iosebashvili contributed to this article.