Add this to List of Trump Administration Accomplishments
Stocks rallied to record highs on Thursday after China said the world’s two largest economies had agreed to remove existing trade tariffs, lifting expectations around a possible resolution to the ongoing U.S.-China trade war.
The Dow Jones Industrial Average climbed 250 points, or 0.97% as trade bellwethers Caterpillar and Boeing were both up at least 1.5%. The S&P 500 rose 0.6% as the financials sector gained 1.1%. Energy stocks also advanced 1.4% while tech and communications services advanced 1.2% each. The Nasdaq Composite, meanwhile, advanced 0.8%.
Chip stocks such as Micron Technology, Advanced Micro Devices and Skyworks Solutions all gained more than 1%. Apple shares advanced 1.1%.
Gao Feng, a ministry spokesperson for China’s Commerce Ministry, said that both sides had agreed to simultaneously cancel some existing tariffs on one another’s goods, according to the country’s state broadcaster. The ministry spokesperson said that both sides were closer to a so-called “phase one” trade agreement following constructive negotiations over the past two weeks.
“This gets us closer to a phase one trade deal, which is more important psychologically than fundamentally,” said Art Hogan, chief market strategist at National Securities. “It’s not as though we’re removing all tariffs and the economic drags dissipate, but what does dissipate significantly is the uncertainty.”
One important condition for a limited trade agreement, Feng insisted, was that the U.S. and China must remove the same amount of charges at the same time.
It comes after reports that a meeting between President Donald Trump and Chinese President Xi Jinping could be postponed until December — delaying a chance for the two leaders to sign an interim trade deal.
“The last 24 hours have seen a bit of whiplash in the U.S./China trade drama, as a potentially negative headline yesterday has been more than offset by a positive one this morning,” said Tom Essaye, founder of The Sevens Report, in a note to clients. But “it’s fair to say that at these levels, the market is already partially pricing in removal of the tariffs that were implemented on September 1.”
“That also means the risk is of disappointment is now real on an actual phase-one announcement, because if all we get is ‘what’s expected’ and we don’t see any existing tariff removal, we could easily see a sell-the-news reaction in stocks,” Essaye said.
Market participants had expected the two economic giants to sign a deal later this month, after both Washington and Beijing spoke of progress in talks late last week. The U.S. and China have imposed tariffs on billions of dollars’ worth of one another’s goods since the start of 2018, battering financial markets and souring business and consumer sentiment.
But the recent optimism around U.S.-China trade has helped stocks push to all-time highs recently. Over the past month, the S&P 500 is up more than 5%.
“We are seeing a nice follow-through on the back of the breakout, the most obvious one being the S&P 500 hitting all-time high,” said Katie Stockton, founder and managing partner at Fairlead Strategies. “The breakout is what helped the market sustain the positive momentum. The short-term overbought condition I think will give way to a little consolidation, but I’m not looking for significant pullback at least not in a couple of weeks.”
On the data front, the latest weekly jobless claims numbers came in at 211,000, down slightly from 218,000 in the previous week.
Qualcomm shares jumped more than 7% after reporting Wednesday quarterly results that topped analyst expectations. The company’s results were driven by strength in Qualcomm’s licensing business.
The Truth Must be Told
Your contribution supports independent journalism
Please take a moment to consider this. Now, more than ever, people are reading Geller Report for news they won't get anywhere else. But advertising revenues have all but disappeared. Google Adsense is the online advertising monopoly and they have banned us. Social media giants like Facebook and Twitter have blocked and shadow-banned our accounts. But we won't put up a paywall. Because never has the free world needed independent journalism more.
Everyone who reads our reporting knows the Geller Report covers the news the media won't. We cannot do our ground-breaking report without your support. We must continue to report on the global jihad and the left's war on freedom. Our readers’ contributions make that possible.
Geller Report's independent, investigative journalism takes a lot of time, money and hard work to produce. But we do it because we believe our work is critical in the fight for freedom and because it is your fight, too.
Please contribute to our ground-breaking work here.
Make a monthly commitment to support The Geller Report – choose the option that suits you best.