Equities surged after the Trump administration confirmed that China committed to buying more U.S. agricultural goods, energy and manufactured products. The Nasdaq benchmarks were the big winners on strength in semiconductors and tech hardware manufacturers. The S&P 500 Index was up for a fourth consecutive day, reaching the highest in almost a month as energy producers gained with West Texas crude surging above $50 a barrel.
U.S. President Donald Trump is reportedly eager to reach a trade agreement with China to help revive the flagging stock market. However, the countries remain far apart on some key issues. And Chinese and American officials are reportedly coordinating their messaging to make sure markets interpret the results of the meeting optimistically.
Treasury yields fell but then reversed direction following the comments by Raphael Bostic, who also said “yes” when asked if the next move on interest rates could be a hike or a cut. The Federal Reserve will release minutes from its December meeting on Wednesday afternoon, which may offer insight into which the pace of future activity.
“There’s a chance they’re done and we could potentially be talking about cutting at some point maybe next year,” said Aaron Clark, a portfolio manager at Boston-based GW&K Investment Management who oversees $36 billion. “I do respect the signal the market sends. And when the market prices lower, clearly there’s some concern that they’ve gone too far and the economy is slowing.”
The Stoxx Europe 600 Index climbed to the highest in a month led by carmakers and miners, while Hong Kong stocks set the pace for Asian benchmarks. And most industrial metals advanced after the Asian nation signaled measures to spur consumption.
Although concerns linger about how protectionist tensions and political instability in the world’s largest economy will affect global growth, they also set up a potential Goldilocks scenario for markets after Fed Chairman Jerome Powell’s apparent dovish shift last week eased fears about tightening financial conditions.
“A softness in the economy or in some indicators would allow the Fed the space not necessarily to continue to raise,” said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh. “That is going to drive the market higher.”
Meanwhile, the U.S. government remains partially shut down as a televised address by Trump failed to convince opponents of his plan to build a wall along the Mexican border, which is at the center of the dispute.
Elsewhere, emerging-market stocks extended a rally that’s taken MSCI’s gauge to the highest in more than a month. The Bloomberg Commodity Index rose for a sixth straight day, and gold ticked higher.
Here are some events investors may focus on this week:
Wednesday sees the release of minutes from the Fed’s Dec. 18-19 policy meeting. Powell will speak to the Economic Club of Washington D.C. on Thursday.Britain’s Parliament resumes a debate on the Brexit withdrawal bill, with Prime Minister Theresa May seeking to avoid defeat in a vote set for the week of Jan. 14.
These are the main moves in markets:
The S&P 500 was up 0.6 percent to 2,590.31 as of 1:12 p.m. in New York, while the Nasdaq 100 Index gained 1 percent. The Stoxx Europe 600 Index increased 0.5 percent to the highest in almost four weeks. The MSCI All-Country World Index advanced 1.1 percent. The U.K.’s FTSE 100 Index Index climbed 0.7 percent to the highest in five weeks. The MSCI Emerging Market Index jumped 2.1 percent to the highest in more than a month.
The Bloomberg Dollar Spot Index dropped 0.6 percent. The euro gained 0.8 percent to $1.1534.The British pound climbed 0.5 percent to $1.278.The Japanese yen rose 0.5 percent to 108.26 per dollar.
The yield on 10-year Treasuries was essentially unchanged at to 2.7261 percent. Britain’s 10-year yield added one basis point to 1.278 percent. Germany’s 10-year yield climbed five basis points to 0.279 percent.
The Bloomberg Commodity Index rose 1.2 percent. West Texas Intermediate crude advanced 4.4 percent to $51.98 a barrel, reaching the highest in a month on its eighth consecutive gain. Gold increased 0.5 percent to $1,291.13 an ounce.
–With assistance from Andreea Papuc, Heesu Lee and Robert Brand.
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The SPDR Dow Jones Industrial Average ETF (DIA) was trading at $239.49 per share on Wednesday afternoon, up $1.57 (+0.66%). Year-to-date, DIA has declined -2.38%, versus a -2.74% rise in the benchmark S&P 500 index during the same period.
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