Market Snapshot: Dow rises nearly 200 points on optimism over U.S.-China trade progress

U.S. stocks posted solid gains Wednesday morning, after President Donald Trump said he may let a China trade-deal deadline “slide” if the two sides were making enough progress.

How are major indexes faring?

The Dow Jones Industrial Average DJIA, +0.52%  rose 191 points, or 0.8%, to 25,617, while the S&P 500 index SPX, +0.41% rose 16 points, or 0.6%, to 2,761.

Read: Morgan Stanley warns of a looming earnings recession

The Nasdaq Composite COMP, +0.28%  climbed 34 points, or 0.5%, to 7,447. A finish above 7,431.50 would mark the end of a bear market for the tech-heavy index that began on Dec. 21.

See: The Nasdaq is on pace to end its longest bear market in nearly 30 years

What’s driving the market?

Trump said Tuesday that he would allow for flexibility on the timeline for a deal with China if an agreement looks close. Meanwhile, Chinese President Xi Jinping is expected to meet key members of the U.S. delegation on Friday, the South China Morning Post reported, citing sources.

A third day of bilateral trade negotiations were under way in Beijing, with Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer expected Thursday for more high-level discussions. The White House had previously referred to its stop points as a “hard deadline.” A 90-day trade truce ends on March 1, and tariffs on some $200 billion in goods had been set to be raised to 10% from 25% at 12:01 a.m. Eastern time March 2.

Read: For the stock market, a trade-war win may be a hollow victory

Meanwhile, Trump said Tuesday a second government shutdown was unlikely, even as he expressed unhappiness with a tentative agreement that allows for 55 miles of new border fencing reached by Democratic and Republican lawmakers late Monday.

Which data and Fed speakers are in focus?

Consumer prices were unchanged in January compared with the month before, the Bureau of Labor Statistics announced Wednesday morning, below the 0.1% increase in prices expected by economists per a MarketWatch poll.

The year-over-year growth in prices as measured by the consumer-price index fell in January to 1.6%, from a rate of nearly 3% seen in July, a trend that has helped support the argument that the Federal Reserve doesn’t need to aggressively raise interest rates this year.

Atlanta Federal Reserve President Raphael Bostic said in a moderated discussion at the European Financial Forum Tuesday morning that he is predicting the Fed will raise rates one time in 2019.

Cleveland Fed President Loretta Mester told an audience in Lexington, Kentucky Wednesday morning that she does not have an economic recession in her forecast, nor does she the U.S. in the midst of a housing bubble.

Philadelphia Fed President Patrick Harker will talk about the economic outlook at a Jewish Business Network lunch in Philadelphia at noon Eastern Time. Bostic, Mester and Harker aren’t voting members of the rate-setting Federal Open Market Committee in 2019.

At 2 p.m., investors will learn the size of the federal budget deficit in December.

What are the analysts saying?

“Developments that show progress on U.S-China trade have proven enough to sustain positive momentum,” Eric Weigand, senior portfolio manager at U.S. Bank Wealth Management, told MarketWatch.

“Its possible to sustain this momentum, as we still see factors in the backdrop that remain fertile like modest inflation, continued economic growth, and a healthy consumer. What we’re most concerned about is whether earnings growth can be sustained. That’s the real issue over the intermediate term,” he said.

“Market participants are likely to keep their gaze locked on the U.S.-China trade sequel, with top-level negotiations scheduled for Thursday and Friday,” wrote Charalambos Pissouros, senior market analyst with JFD Brokers.

Xi’s planned meeting with U.S. negotiators “adds to signs that the two nations are willing to work things out. In our view, further positive remarks are likely to keep market sentiment supported, but for a sustained recovery in risk assets, like equities, we would like to see signatures,” Pissouros said.

What stocks are worth watching?

Shares of Dish Network Corp. DISH, -7.36% fell 7.5% after the satellite TV company reported fourth-quarter earnings that fell short of Wall Street expectations, while reporting the number of its pay-TV subscribers fell more than forecast.

Activision Blizzard Inc. ATVI, +5.35% shares were up 5.2% after the company reported fiscal fourth-quarter Tuesday evening, while also announcing a restructuring plan that includes reducing its staff by 8%.

Though the company missed quarterly earnings and profit forecasts, investors have bid up the stock on optimism toward management plans for cost cutting and a pledge to increase its dividend by 9%.

Shares of Hilton Worldwide Holdings Inc. HLT, +5.88% rose 6.5% after the hotel operator announced a fourth-quarter adjusted profit and revenue that rose above expectations and provided an upbeat earnings outlook.

Interpublic Group of Cos. IPG, +3.62% stock was up 5% after the advertising giant announced it would raise its quarterly divided 2% to $23.50 per share.

Shares of TripAdvisor Inc. TRIP, -7.39% were down 7.8%, after the company released a Tuesday evening earnings report that fell short of analyst expectations.

Johnson & Johnson JNJ, +0.22% shares were rising 0.3%, after the firm announced subsidiary Ethicon Inc. agreed to acquire surgical robotics company Auris Health, Inc. for approximately $3.4 billion in cash.

How did the major benchmarks trade yesterday?

Major indexes closed at 2019 highs on Tuesday, with the Dow Jones Industrial Average DJIA, +0.52% climbing 372.65 points, or 1.5%, to 25,425.76, while the S&P 500 SPX, +0.41% rose 1.3% to 2,744.73, finishing above its 200-day moving average for the first time in 46 days. That marked the S&P’s longest sojourn under the key trend line since March 2016, according to the Dow Jones Market Data Group.

The Nasdaq Composite Index COMP, +0.28% advanced 1.5% to 7,414.62.

How were other markets trading?

Trade-deal optimism and a strong session for Wall Street on Tuesday inspired gains across global markets. In Asia, the Nikkei 225 index NIK, +1.34% jumped 1.3% and the Shanghai Composite rose nearly 2%.

In Europe, stocks were trading higher, with the Stoxx Europe 600 SXXP, +0.73% advancing, along with the United Kingdom’s FTSE 100 UKX, +0.90%

Crude prices CLH9, +2.41%  were rising 2.1% after Saudi Arabia’s Energy Minister Khalid al-Falih told the Financial Times in an interview that the country would further reduce its oil production, to near 9.8 billion barrels a day in March.

Read: Is there a ‘Saudi put’ on oil prices? Here’s one analyst’s argument

Gold GCH9, +0.15% was also on the rise, while the U.S. dollar DXY, +0.29% was advancing against its peers.

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