Market Snapshot: Dow jumps by more than 200 points as tech-fueled rally overshadows trade jitters

U.S. stocks surged midday Thursday, approaching session highs, as gains in internet and technology shares helped Wall Street resume a recent uptrend that had been interrupted in the past 24 hours by a fresh intensification of tariff and political disputes between Washington and the rest of the developed world.

However, upbeat economic reports and signs that the U.S. and China, the two biggest economies in the world, are open to resolving their differences has helped to refresh buying appetite.

What are markets doing?

The Dow Jones Industrial Average DJIA, +0.77% rose 211 points, or 0.9%, to 24,911, supported by gains of at least 1.4% in shares of Boeing Co. BA, +1.26%   and Caterpillar Inc. CAT, +1.41% considered the most sensitive to trade-war fears. On Wednesday, Caterpillar shares sank 3.2% while Boeing’s stock fell 1.9%.

Meanwhile, the S&P 500 index SPX, +0.70%  gained 21 points, or 0.8%, to 2,794, with the technology sector XLK, +1.32% up 1.7%, representing the best performance among the index’s 11 sectors. As measured by the Technology Select Sector SPDR ETF, tech shares were up 1.4%.

The tech-centric Nasdaq Composite Index COMP, +1.10% rose 87 points, or 1.1%, to 7,803, putting the gauge in record territory. The last time the Nasdaq closed at an all-time high was June 20, according to FactSet data.

Meanwhile, the Nasdaq-100 Index NDX, +1.34%   rallied to an intraday record high of its own at 7,350.17, supported by large-capitalization technology and internet names.

The run-up come after a selloff on Wednesday, when U.S. stocks snapped a four-session winning streak as the Trump administration announced plans to impose another round of tariffs on Chinese goods.

Still, all three benchmarks are on pace to rise for five of the past six sessions. For the week, Dow is set to post a weekly gain of 1.9%, which would represent its best weekly win since the period ended June 8. The Nasdaq is eyeing a weekly advance of 1.5%, while the S&P 500 is on pace for a weekly return of 1.3%.

Read: Why stock investors may be disappointed by the coming earnings season

What is driving the market?

The trading mood on Thursday morning scored a boost from signs the U.S. and China are willing to resume trade talks, which could end up in a bilateral agreement. Bloomberg reported late Wednesday that officials from both countries have raised the prospects of restarting a conversation at a high level.

Fears of a full-blown trade war possibly developing between the world’s two largest economies have weighed on equities around the globe in recent months, although analysts have pointed out that markets have remained somewhat resilient.

Meanwhile, the U.S. consumer-price index increased 0.1% in June. Core CPI, minus volatile food and energy, rose 0.2% on the month. Moreover, the 12-month gain for CPI rose to a 6-yr high of 2.9%, reflecting a U.S. economy that is running hotter than anytime since the 2007-09 recession.

A reading of weekly initial jobless claims showed a fall of 18,000 to 214,000 in first week of July, back toward the lowest levels in almost 50 years.

Economists polled by MarketWatch expect consumer prices to have risen 0.2% month-on-month in June.

Renewed optimism, although tenuous at times in recent trading sessions, also comes as investors await of the unofficial start of the second-quarter earnings season, with a number of significant banks, considered a bellwether for the economy, set to report Friday.

What are strategists saying?

“If you look at the Dow, it is up more than 500 points since Thursday’s close. I think the market is really focusing on the fundamentals of the economy here in the U.S.,” said Lindsey Bell, investment strategist at CFRA.

“Equity markets have bounced back today, as dealers are over the shock that the US is planning to impose tariffs on $200 billion worth of Chinese goods in August. Now that the dust has settled, traders have swooped in to take advantage of relatively cheap stocks, wrote David Madden, market analyst at CMC Markets UK in a Thursday note.

“The [CPI] reports point to an increase in demand, which is positive for the US economy. There is speculation the Federal Reserve will hike interest rates twice more this year, and a firm inflation rate will make monetary tightening more likely,” he wrote.

What’s on the economic calendar?

The Treasury Department is slated release its June figures on the federal budget for June at 2 p.m. Eastern.

See: MarketWatch’s Economic Calendar

Stock movers

Shares in software company CA Inc. CA, +17.97%  rallied 18% trade after chip giant Broadcom Inc. AVGO, -14.91%  confirmed late Wednesday it has agreed to take over the software company for $44.50 a share. Broadcom shares were down about 14.4%.

Shares of Wells Fargo & Co. WFC, -0.17% were down 0.8%, those for JPMorgan Chase & Co. JPM, +0.00% were down 0.4%, while Citigroup Inc.’s stock C, +0.47% was up less than 0.1%, with all three companies set to report quarterly results Friday.

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