U.S. stock benchmarks jolted higher Thursday morning, reversing premarket losses, after President Donald Trump tweeted that the U.S. is “getting very close to a big deal with China,” signaling that tariffs set to go into effect Sunday may be avoided.
How are benchmarks performing?
The Dow Jones Industrial Average DJIA, +0.98% rose 156 points, or 0.6%, at 28,063, the S&P 500 index SPX, +0.98% gained 15 points, or 0.5% to 3,156, and the Nasdaq Composite Index COMP, +0.95% added 36 points, also 0.4%, to 8,690.
The S&P 500 was trading above its record closing high of 3,153.63, set Nov. 27, and set a record intraday high as well.
On Wednesday, the Dow rose 29.58 points, 0.11%, Wednesday, closing at 27,911.30, the S&P 500 index closed 9.11 points, 0.29%, higher, at 3,141.63, while the Nasdaq Composite Index COMP, +0.95% rose 37.87 points, 0.44%, to 8,654.05.
What’s driving the market?
The president said on Twitter Thursday that the U.S. and China are nearing a “big deal” that could avoid fresh tariffs, planned to go in effect Dec. 15, and potentially roll back some existing duties, sending U.S. stocks to at or near record levels.
See: Get ready for a jolly holiday season, and maybe a stock-market rally, Ned Davis Research says
The statement comes after Fed policy makers said they believe interest rates are low enough to stimulate growth, and left monetary policy unchanged on Wednesday afternoon at a 1.75%-2.0% range, while expressing optimism about U.S. economic health. The economic outlook is “a favorable one,” and lower rates are helping, Chairman Jerome Powell said at a news conference following the Federal Open Market Committee’s policy statement a day ago.
“Low rates for longer is always a winner in financial markets,” wrote Jasper Lawler, head of research at London Capital Group, in a Thursday note. “The Fed pointing to another year of interest rates at the current low levels satisfied investors who bought US shares and sold the US dollar in the wake of the meeting,” he said.
Meanwhile, the European Central Bank announced its decision to keep its main deposit rate at negative 0.5%, while maintaining its rate of asset purchases at €20 billion a month, as widely expected by analysts. The meeting of ECB was the first presided over by new President Christine Lagarde, and investors have been watching for signals toward future policy moves as she delivers a news conference at 8:30 a.m. Eastern Time.
The ECB update comes as the U.K. is holding key general elections, which will play a crucial role in determining the course of its plans to exit from out of the European Union. Recent polling figures, indicate Prime Minister Boris Johnson’s Conservative Party as most likely to win, but his lead has narrowed over the rival Labour Party, injecting a modicum of doubt in the outcome.
In economic data, new applications for unemployment jumped by 49,000 to 252,000 during the week ended Dec. 7, the Labor Department said Thursday, the highest level since Sept. 2017. Wholesale price inflation remained tame, with the producer-price index unchanged in November, with core producer prices, which strips out volatile energy and food prices, falling to a three-year low of 1.3%.
Which stocks are in focus?
Shares of General Electric Co. GE, +4.60% gained 3.4%Thursday, after UBS analyst Markus Mittermaier upgraded shares to the equivalent of “buy” from “hold” and raised his price target to $14 from $11.50, compared with the stock’s $10.97 closing price Wednesday.
Starbucks Corp. SBUX, +2.55% stock rose 1.2% after it was upgraded to overweight from neutral by J.P. Morgan, after a meeting with company management.
Delta Air Lines DAL, +4.16% said Thursday it expects to generate per-share earnings of $6.75 to $7.75 in 2020 as revenue grows 4% to 6%. Shares rose 2% Thursday.
Southwest Airlines LUV, +2.43% said Thursday it has reached a settlement with Boeing BA, +0.07%, over the grounding of its 737 Max fleet totaling about $125 million and that it will share the money with its employees. The company’s stock rose 0.6%.
Lululemon Athletica LULU, -5.81% fell 4.3% after the apparel retailer reported an adjusted third-quarter profit below Wall Street expectations late Wednesday.
Fiat Chrysler FCAU, +2.72% ended a lengthy round of labor talks in Detroit with the United Auto Workers and agreed a new four-year contract, the last of three deals negotiated this year by the union. Shares were 1.5% higher Thursday.
Disney DIS, +0.57% has been downloaded 22 million times to mobile devices in what is probably the most successful launch in the nascent industry’s history, according to app-tracking firm Apptopia.
How are other markets faring?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +4.01% held at around 1.79% as investors monitored ECB and trade developments.
West Texas Intermediate crude CLF22, -1.03% on the New York Mercantile Exchange gained 15 cents, or 0.3%, to $58.93 a barrel, after a 0.7% decline on Wednesday.
February gold GCG20, -0.29% on Comex added $12.90, or 0.9%, to $1,488 an ounce, with the metal on track for a third gain in a row.
The U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, -0.09%, was down 0.3% at 97.11, against a basket of a half-dozen currency peers.
In Europe, the Stoxx 600 Europe index SXXP, +0.48% was trading 0.2% lower at 405.33.
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S&P 500 jumps to record after Trump signals imminent China-trade deal - MarketWatch
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