Dow Jones Industrial Average rallies 400 points on hopes China/US are making progress in trade talks

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December 12, 2018 12:33pm INDEXDJX:.DJI NYSE:DIA

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From Fred Imbert & Sam Meredith: Stocks traded higher on Wednesday as investors digested news related to the ongoing trade war between the United States and China.

The Dow Jones Industrial Average rose 400 points, led by gains in Caterpillar. The S&P 500 climbed 1.7 percent as the tech sector outperformed. The Nasdaq Composite jumped 2.2 percent as Facebook, Amazon, Netflix and Google-parent Alphabet rose.

Shares of Caterpillar and Boeing both rose more than 1.5 percent. These stocks are considered global trade bellwethers because of their exposure to markets abroad.

Bank stocks also rose. The SPDR S&P Bank ETF (KBE) gained 2 percent while shares of J.P. Morgan Chase, Morgan Stanley and Citigroup all traded higher.

The Wall Street Journal reported China is working to increase access to foreign companies, a move aimed at smoothing U.S.-China trade relations. This plan, the report says, would replace the country’s Made in China 2025 plan, a framework aimed at making China a leader in industries like clean-energy cars and robotics.

President Donald Trump told Reuters on Tuesday he would he would intervene in the Justice Department’s case against a top executive at Chinese telecoms giant Huawei if it would help serve national security interests or help U.S.-Sino trade talks. Huawei is the one of the largest tech companies in China. It is also seen as a symbol of pride by the Chinese government.

Trump also said Tuesday talks between Washington and Beijing were ongoing and confirmed he would not raise tariffs on Chinese imports until he was sure about a comprehensive trade agreement.

Meanwhile, a Reuters report said Chinese state-owned companies bought at least 500,000 tons of U.S. soybeans on Wednesday.

Wednesday’s moves come after another volatile session on Wall Street. The Dow swung more than 500 points before closing slightly lower. The S&P 500 and Nasdaq also alternated between gains and losses throughout the session.

“This intraday volatility is very headline-driven,” said Mona Mahajan, U.S. investment strategist at AllianzGI. “Between trade, the Federal Reserve and recession fears, it’s reason to give investors pause.”

“Investors are also more willing to sell rallies than buy dips. That’s the sentiment right now,” Mahajan said.

Multiple reports on Tuesday pointed to China cutting tariffs on U.S.-made cars. A U.S. official told Reuters China indicated it will lower the tariffs, but the U.S. would wait on formal documentation and timing.

Shares of home-improvement retailer Lowe’s rose 3.5 percent after the company announced a $10 billion buyback. Lowe’s also reiterated its profit outlook for fiscal 2018.

The SPDR Dow Jones Industrial Average ETF (DIA) was trading at $247.87 per share on Wednesday afternoon, up $3.64 (+1.49%). Year-to-date, DIA has gained 1.03%, versus a 0.88% rise in the benchmark S&P 500 index during the same period.

DIA currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #4 of 82 ETFs in the Large Cap Value ETFs category.

This article is brought to you courtesy of CNBC.

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