Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Stocks Rally As Hope Mounts For U.S.-China Trade Deal

Published 01/19/2019, 11:59 PM
Updated 03/05/2019, 07:15 AM

Stocks rallied Friday, with major indexes trading higher for a fourth session, on reports that stoked hopes for progress in trade talks between the U.S. and China. Optimism over a potential bilateral deal helped to offset worries about the prolonged partial government shutdown and mixed corporate results.

How Are The Benchmarks Faring?


The Dow Jones Industrial Average DJIA, +1.23% rose 357 points, or 1.5%, to 24,727, the S&P 500 index SPX, +1.24% gained 38 points, or 1.4%, to 2,673, and the Nasdaq Composite COMP, +1.11% added 96 points, or 1.4%, to 7,181.

For the week, all the benchmarks are up 3%.

Equity markets will be closed on Monday in observance of Martin Luther King Jr. Day.

What’s Driving The Market?

Upbeat expectations on trade were reinforced by a report from Bloomberg that Chinese officials have offered to increase imports from the U.S. by $1 trillion over the next six years, a plan that would reportedly bring the U.S. trade deficit with China to zero by 2024.

The latest developments come on the heels of a Thursday report from The Wall Street Journal that U.S. officials were debating lower tariffs on Chinese imports to give Beijing an incentive to make deeper concessions over the trade dispute.

A Treasury spokesman immediately walked back the report, telling the newspaper that any bargaining positions remained “at the discussion stage.” The source also said neither Treasury Secretary Steven Mnuchin nor U.S. Trade Representative Robert Lighthizer has made any specific trade-related recommendations and talks were still ongoing.

Meanwhile, investors continue to digest a new round of earnings reports, including those from Netflix Inc (NASDAQ:NFLX). NFLX, -3.19% , which reported strong subscriber and profit growth after the bell on Thursday, but missed on revenue.

The U.S. government’s partial shutdown is in its 28th day with no sign of resolution amid warnings that a prolonged political standoff will hurt economic performance.

U.S. industrial production rose 0.3% in December, the Federal Reserve reported Friday morning, in line with expectations, per a MarketWatch poll of economists.

The University of Michigan’s consumer confidence index fell to a more than two-year low of 90.7 in January, down from 98.3 in December, and well below expectations of 97.5, according to a MarketWatch economist poll.

New York Fed President John Williams, a voting member of the rate-setting Federal Open Market Committee, said that the Federal Reserve should respond “carefully” to a U.S. economy that appears to be slowing, in a speech to the New Jersey Bankers Association’s Economic Leadership Forum.

Philadelphia Fed President Patrick Harker, a nonvoting member of the FOMC, said in a speech that “overall the economy is doing well,” but that the good economy isn’t yet benefiting some workers who lack the skills and social capital get hired by companies in need of labor.

What Are The Analysts Saying?

“We’ve generally have seen good corporate earnings,” so far this season, Mark Esposito, president of Esposito Securities told MarketWatch.

“Other than a few exceptions, bank earnings have been good, which reflects well on the overall economy,” he said, pointing to SunTrust Banks Inc (NYSE:STI).’s Friday earnings report as an example of a regional bank outperforming expectations.

“With the shutdown slowly taking 0.1 percentage points of GDP each week, the president knows a victory in resolving the trade war can give him leverage on continuing his battle with Democrats on his border wall funding,” wrote Edward Moya, market analyst at OANDA, in a note.

“Yesterday’s Wall Street Journal reports that Treasury Secretary Steven Mnuchin reportedly proposed the idea of lifting some or all the tariffs gave stocks a strong bid. It was quickly refuted by the Treasury, but the story shows how anxious markets are in looking for positive momentum to continue with trade talks,” he added.

Which Stocks Are In Focus?

Tesla (NASDAQ:TSLA) Inc. TSLA, -11.36% shares slumped 11% after the company announced job cuts and warned on profits.

Netflix NFLX, -3.19% shares retreated 2.1%, indicating some dissatisfaction among investors despite the streaming video service giant’s fourth-quarter results and upbeat calls from Wall Street analysts.

Shares of American Express Co (NYSE:AXP) +0.06% slid 0.5% after the financial-services company reported mixed fourth-quarter results.

SunTrust Banks STI +4.89% rallied 5.2% after the bank reported better-than-expected profits.

Shares of Tiffany & Co (NYSE:TIF) +5.03% climbed 5.8% even after the luxury jewelry retailer reported lower holiday-period sales from a year ago and provided a downbeat full-year profit and sales outlooks. The stock has fallen nearly 35% over the past six months.

Eli Lilly (NYSE:LLY) -2.79% fell 2.8% after the company said a late-stage trial of a treatment for sarcoma failed to meet its main goals.

Shares of VF Corp (NYSE:VFC). VFC, +13.06% jumped 13% after the parent company of Vans and The North Face reported better-than-expected earnings and sales.

How Are Other Markets Trading?

Markets in Asia surged, led by a 1.4% jump for China’s Shanghai Composite Index SHCOMP, +1.42% In Europe, the Stoxx Europe 600 SXXP, +1.80% rose 1.8%.

Crude oil CLG9, +3.13% moved higher, while gold GCG9, -0.75% fell and the U.S. dollar DXY, +0.26% was firmer.

Original post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.