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Stocks Log Modest Gains as U.S. and China Reach Phase One Trade Agreement

Stocks ended slightly higher Friday after officials in Washington and Beijing said major progress was made in trade negotiations.
  1. Stocks end higher Friday with the Nasdaq and S&P 500 at closing records, after the U.S. and China agreed to the text of a phase one trade agreement.
  2. Costco is Real Money's Stock of the Day. The warehouse retailer declined Friday after saying a late Thanksgiving holiday held down fiscal first-quarter sales.
  3. Oracle posted mixed second-quarter earnings and said it has no plans to hire a co-CEO following the death of Mark Hurd earlier this year.

Stocks ended modestly higher Friday after the U.S. and China agreed to the text of a phase-one trade agreement.

The agreement, both Washington and Beijing said, will see the removal of tariffs
on Chinese goods in stages, according to China's vice commerce minister, Wang Shouwen. China, the world's second-largest economy, also will boost U.S. imports.

U.S. President Donald Trump, in a tweet Friday, said the U.S. "agreed to a very large Phase One Deal with China. They have agreed to many structural changes and massive purchases of Agricultural Product, Energy, and Manufactured Goods, plus much more. The 25% Tariffs will remain as is, with 7 1/2% put on much of the remainder...”

“The Penalty Tariffs set for December 15th will not be charged because of the fact that we made the deal. We will begin negotiations on the Phase Two Deal immediately, rather than waiting until after the 2020 Election. This is an amazing deal for all. Thank you!,” Trump added on Twitter.

The agreement between the countries marks one of the most significant advances of the 18-month trade war between the world's two biggest economies.

The Dow Jones Industrial Average ended up was down 3.33, or 0.01%, to 28,135.38, the S&P 500 rose 0.23, or 0.01%, to end at 3,168.80  and the Nasdaq gained 0.20% to end at 8,734.88. The Nasdaq and S&P 500 closes were records, while the Dow's close was about 30 points below its record set Nov. 27. All of the indexes hit record intraday highs earlier in Friday's session.

Leading the Dow higher were American Express  (AXP) - Get American Express Company Report, Visa  (V) - Get Visa Inc. Report and Apple  (AAPL.) - Get Apple Inc. Report

U.K. Prime Minister Boris Johnson celebrated the biggest victory of his political life with a vow to take Britain out of the European Union in January following what he called the “irrefutable, irresistible, unarguable decision of the British people."

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Johnson's Conservative Party won its largest Parliamentary majority in more than three decades on Thursday, securing at least 364 seats in the House of Commons and handing the Labour opposition its worst defeat since the 1930s. The result gives Johnson, the face of the 2016 referendum to leave the European Union, more than enough support to push through his stalled Brexit bill and pull Britain from the bloc as early as Jan. 31.

Software giant Oracle  (ORCL) - Get Oracle Corporation Report traded lower Friday after posting mixed second-quarter earnings and saying it has no plans to hire a co-CEO following the death of Mark Hurd earlier this year.

Costco  (COST) - Get Costco Wholesale Corporation Report, the warehouse retailer and Real Money's Stock of the Day, fell Friday after saying a late Thanksgiving holiday held down fiscal first-quarter sales.

E-commerce sales in the quarter, Costco said, were hurt by about 12 percentage points because the Thanksgiving through Cyber Monday retail sales rush occurred a week later than it did a year earlier. 

Adobe  (ADBE) - Get Adobe Inc. Report rose after the graphics-software company reported stronger-than-expected fiscal fourth-quarter earnings.

Broadcom  (AVGO) - Get Broadcom Inc. Report slumped after the chipmaker's earnings in its fiscal fourth matched analysts' estimates and revenue came in slightly higher than forecasts.

Retail sales for November in the U.S. rose 0.2%, coming in below economists' estimates of up 0.5%.

"November sales were soft almost across the board, with electronics (up 0.7%, reversing their Oct drop) and nonstore (up 0.8%, below trend) the key exceptions," wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics. "The fourth quarter as a whole could yet be rescued by a strong December, though, and/or the November data could be revised up substantially. 

"The sales numbers are volatile, and forecasting holiday season sales with confidence has been made very difficult by the structural shift in the timing of peak spending, towards Thanksgiving weekend and Cyber Monday; the latter this year fell in December," Shepherdson added.