Investing.com - The Dow notched record highs Thursday on surging tech stocks, led by Apple, and fading worries about trade, even as analysts warned of a further escalation in the U.S. and China trade spat.
A wave of buying emerged across Wall Street, most notably in tech stocks on increasing hopes the United States and China will find a solution to their trade dispute after both nations imposed watered-down tariffs on each other earlier this week.
China said Tuesday it would impose new tariffs on U.S. goods worth $60 billion on Sept. 24. The announcement arrived after the Trump administration announced the U.S. will impose 10% tariffs on $200 billion in Chinese goods next week.
The levies imposed by both countries came at a lower rate than many had feared, helping lift sentiment on trade.
The optimism on the trade front was captured by strong gains in both Boeing (NYSE:BA) and Caterpillar (NYSE:CAT), both of which are believed to be a barometer of trade given their large exposure to China. Apple (NASDAQ:AAPL), whose products were scrubbed off a list of items subject to tariffs, rallied nearly 1%, boosting tech.
Not everyone is convinced, however, that the U.S.-China trade spat will be resolved sooner rather than later: Goldman Sachs said the trade dispute between the two nations is in its infancy, warning that Washington may take further action against Beijing in "the next couple of weeks."
"Additional tariffs [from the United States] are the most likely outcome, as the policy issues underlying the dispute will be difficult to resolve, the bilateral trade deficit at the heart of the dispute is unlikely to narrow substantially regardless of policy actions, and the White House will have greater political flexibility to increase tariffs after the midterm election," Goldman Sachs said in a note.
The well of rising bond yields dried up Thursday, meanwhile, but that didn’t stop bank shares staging a rally for the second day in a row, pushing the broader averages to record highs.
Goldman Sachs (NYSE:GS), Citigroup Inc (NYSE:C) and Bank of America (NYSE:BAC) closed higher, adding to gains from Wednesday, which followed a rise in the 10-year treasury yield to its highest level since May.
Rising Treasury yields are seen as boon for banks, boosting their net interest margin, the difference between the interest income generated by banks and the amount of interest paid out to their lenders.
Energy, meanwhile, struggled to keep up with the rally, following a slump in oil prices after President Donald Trump demanded OPEC find a way to slash oil prices.
On the New York Mercantile Exchange crude futures for November delivery fell by 32 cents to settle at $70.80 a barrel.
In corporate news, Adobe (NASDAQ:ADBE) confirmed that it's acquiring Marketo, a company that sells marketing software, from Vista Equity Partners for $4.75 billion.
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