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Wall St. rises as strong Chinese data eases growth worries

Published 09/04/2019, 10:47 AM
Updated 09/04/2019, 11:47 AM
Wall St. rises as strong Chinese data eases growth worries

Wall St. rises as strong Chinese data eases growth worries

By Uday Sampath Kumar

(Reuters) - U.S. stocks rose on Wednesday as upbeat data from China's services sector eased concerns about a global economic slowdown, while Hong Kong's withdrawal of a controversial bill supported sentiment.

Activity in China's services sector expanded at the fastest pace in three months in August, providing a boost to the world's second-largest economy that has been struggling to reverse a prolonged slump in its manufacturing sector.

Sentiment also got a lift after Hong Kong leader Carrie Lam withdrew an extradition bill that had triggered months of often violent protests in the Chinese-ruled city.

The three main indexes had come under pressure on Tuesday after the United States and China imposed new tariffs on each other's goods and data showed a contraction in U.S. factory activity in August.

"The positive economic news out of China is offsetting the weak manufacturing data from the U.S. yesterday and diminishes the fear of an economic downturn," said Shawn Gibson, chief investment officer at asset management firm Liquid Strategies.

"Global growth and not just U.S. growth is a very important narrative for investors because a strong Chinese economy is important to our economy as well," Gibson added.

Markets struggled last month as escalating trade tensions and the inversion of a key part of the U.S. yield curve, often seen as a sign of recession, drove investors away from risky assets and pushed the S&P 500 (SPX) to log its worst August in four years.

Further easing concerns of a slowdown were comments from New York Federal Reserve President John Williams (NYSE:WMB) who said he is ready to "act as appropriate" to help the United States avoid an economic downturn but so far the economy appeared to be in a good place.

Ten of the 11 major S&P sectors were higher, with a 1.05% rise in technology stocks (SPLRCT) providing the biggest boost.

Trade-sensitive chipmakers accounted for a major portion of those gains, with the Philadelphia Semiconductor index (SOX) up 2.18%.

Bank stocks rose 2.18%, bouncing back from a selloff on Tuesday when the 10-year U.S. Treasury yield (US10YT=RR) hit its lowest since July 2016.

UBS slashed its forecasts for global growth and government bond yields, predicting 10-year U.S. yield, the benchmark for global borrowing costs, would end the year at just 1%.

Gibson said the nonfarm payrolls report due Friday will be very critical, because any sort of weakness in data could push Treasury yields even lower and signal that bond investors are concerned about an upcoming recession.

At 10:17 a.m. ET the Dow Jones Industrial Average (DJI) was up 148.56 points, or 0.57%, at 26,266.58, the S&P 500 (SPX) was up 16.88 points, or 0.58%, at 2,923.15 and the Nasdaq Composite (IXIC) was up 57.02 points, or 0.72%, at 7,931.18.

Tyson Foods Inc (N:TSN) shares fell 5.2% to the bottom of the S&P 500 after the United States' biggest meat processor cut its 2019 earnings forecast.

PVH Corp (N:PVH) jumped 3% as the Calvin Klein-owner's chief executive officer, Emanuel Chirico, on Tuesday announced plans to buy company shares.

Data showed the U.S. trade deficit narrowed slightly in July as exports rebounded, but the gap with China surged to a six-month high.

Advancing issues outnumbered decliners by a 4.17-to-1 ratio on the NYSE and by a 2.47-to-1 ratio on the Nasdaq.

The S&P index recorded 52 new 52-week highs and one new low, while the Nasdaq recorded 44 new highs and 38 new lows.

Latest comments

Bloomberg says everything is great. There is no more fear in the market nothing to see here nothing to worry about. Go forward people spend some money. Amazing one day fastest recovery in the history of mankind
Follow the data, not the noise and show ponies, this is where the opportunity is for traders
Roger that!!!  Risk appetite on!  Everything is great again.
tomorrow 100 points down due to trade worry...i dont these news logics....
Alright, all clear.
Alright, all clear.
SORRY , I AM. We have seen the highs of the day- OF THE YEAR.
Watch...outch. In 3 months or less, inflation to skyrocket. I think, bonds is a BAD INVESTMENT right now.
Are you out of your mind. The tariffs just took effect last weekend do you think the companies will avoid all those taxes they have to pay. And all of the sudden perform great. No the tariffs will ********their profit margins causing anxiety in the US futures
The investment news is very soft when the reality is expected a resounding fall of wall street going on December 2019
Shanghai exchange recovered last mth losses and upto 1.2 tank filled while dow jones only 0.5 tank filled as of today. Half-one ball...
So what was the Chinese data that was so robust, what were the numbers. I hate articles that don't support the title with factual backup. Typical of article from Reuters though.
Its the services PMI , but seems like everyone ignored the tariff on sept 1st .
if everyone knows this data who going to lose the money
yes, exactly. The narrative is getting old. I follow market price, not the news. Pull up your charts on renko if you want to follow the market direction. News irrelevant.
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