Dow Jones Industrial Average rallies as Wall Street awaits US-China trade deal news

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From Fred Imbert: The Dow Jones Industrial Average rose on Thursday as investors awaited for more news on a potential trade deal between China and the U.S.

The 30-stock index traded 150 points higher, led by a 2.7% gain in Boeing. The other major indexes struggled, however, as the S&P 500 gained just 0.1% while the Nasdaq Composite teeterd along the flatline.

Boeing rose despite Ethiopia saying the company must review the “controllability” of its 737 Max 8 jet. This comes after an Ethiopian Airlines flight operated with a 737 Max 8 crashed last month.

The Wall Street Journal reported that Donald Trump expects to announce the date of a trade summit with Chinese leader Xi Jinping later in the day, lifting market sentiment. Trump is due to meet with Chinese Vice Premier Liu He at the White House on Thursday.

The U.S. and China have imposed tariffs on billions of dollars’ worth of one another’s goods over the past year, battering financial markets and souring business and consumer sentiment.

Matt Lloyd, chief investment strategist at Advisors Asset Management, expects some sort of trade deal to be reached. This will boost equity prices, but volatility will persist as key issues like intellectual property theft will likely not be fully solved.

“The trade deal is really two deals. First, you have the numbers, the tariffs and all that; that’s the easy fix. Intellectual property on the other side, that’s not going to be fixed right away. That’s going to take a few years, in my opinion,” said Lloyd.

Improvement in U.S.-China trade talks has boosted stocks to start off 2019. The S&P 500 is up more than 14% year to date, with technology stocks leading the way. A reversal in the Federal Reserve’s policy stance has also lifted equity prices.

The Fed signaled at is March meeting it would not raise rates at all in 2019, a sharp pivot from the central bank’s previous forecast of two rate hikes for the year. One key reason for the central bank’s change is deteriorating economic data.

On Wednesday, the ISM services index fell to its lowest level since August 2017. Meanwhile, a private payrolls report disappointed investors. The Citi U.S. Economic Surprise Index — which tracks how economic data fares against estimates — has also dropped to its lowest level since July 2017.

Tesla shares dropped about 9% after the company said it delivered fewer-than-expected Model 3 cars in the first quarter. Facebook shares rose 1.7% after Guggenheim upgraded the social media company to buy from neutral, citing “stable” user trends and investors feeling more comfortable with the company’s privacy issues.

–CNBC’s Sam Meredith contributed to this report.

The SPDR Dow Jones Industrial Average ETF (DIA) was trading at $263.31 per share on Thursday afternoon, up $1.31 (+0.50%). Year-to-date, DIA has gained 7.33%, versus a 7.82% 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.