China confirms plans to send top negotiator to sign phase-one trade agreement with U.S. next week
U.S. stocks swept to record highs once again Thursday as investors focused on progress on the trade pact with China due to be signed next week and amid an easing of concerns about war in the Middle East.
How did benchmarks perform?
The Dow Jones Industrial Average DJIA, +0.74% gained 211.81 points, or 0.7%, to close at 28,956.90, while the S&P 500 index SPX, +0.67% rose 21.65 points, or 0.7%, to 3,274.70. The Nasdaq Composite Index SPX, +0.67% added 74.18 points to finish at 9,203.43, a gain of 0.8%.
All three benchmarks set new intraday and closing highs, with the Dow nearing the psychologically important 29,000 threshold.
What drove the market?
China’s top trade negotiator, Vice Premier Liu He, will lead a delegation to Washington next week to sign a phase-one trade deal, The Wall Street Journal reported Thursday, citing China’s Commerce Ministry.
Trade negotiations have been a driver for market moves for more than a year because President Trump’s imposition of import tariffs has slowed global economic growth.
The progress on China trade talks has helped, at least momentarily, to put the threat of conflict between the Washington and Tehran on the back burner after the Islamic Republic late Tuesday launched a missile strike on U.S. military bases in Iraq in retaliation for the killing of one of its top generals last week.
“We’ve had several data points that have provided a bit more clarity, so at the margins investors have some more runway,” said Jack Janasiewicz, portfolio manager at Natixis Advisors, in an interview. “We’ve got the phase-one deal that sounds like it’s going to be signed next week, global growth numbers that have been OK and highly accommodative central banks around the world,” all of which are helping send markets higher, he said.
Moreover, investor sentiment was buoyed by remarks by President Donald Trump on Wednesday who responded to the Iranian attacks by Iran by playing down their importance, saying that no U.S. casualties were sustained and that only ‘minimal’ damage was done to U.S. military facilities in Iraq.
The number of Americans newly applying for jobless benefits during the seven days ended Jan 4. fell for the fourth week in a row to 214,000.
“The deterioration in business surveys in the spring and summer has not been followed by rising layoffs,” said Ian Shepherdson, chief economist for Pantheon Macroeconomics. “At worst, gross hiring might have dipped a bit, though the strong recent payroll numbers cast doubt even on that idea. Layoffs remain at their lowest, as a share of the workforce, since the data were first collected on their current basis in 1948”
Meanwhile, Federal Reserve Vice Chairman Richard Clarida said Thursday that the economy was on solid ground, but stressed that the Fed’s interest-rate policy may be changed at any meeting. Separately, New York Fed President John Williams said the world’s central banks have to prepare for a long stretch of low interest rates.
St. Louis Fed President James Bullard said Thursday that the central bank has a “reasonable chance” of achieving a soft landing for the U.S. economy this year, despite geopolitical concerns. He sees trade tensions continuing, but believes businesses have found ways to work the disruptions.
Which stocks were in focus?
Apple Inc. AAPL, +2.12% shares gapped up to another record after upbeat data on China iPhone sales. Apple ended with a gain of 2.1%.
Uber Technologies Inc. UBER, +0.12% introduced changes to its service in California, including giving drivers the ability to reject rides without penalty, while eliminating some preset fares for riders, as it attempts to make a stronger case that its drivers are independent contractors, not employees. Shares ticked up fractionally midday after losing ground earlier.
Kohl’s Corp. KSS, -6.54% shares slid 6.5% after the retailer reported declining comparable holiday-season sales.
Bed Bath & Beyond BBBY, -19.22% shares lost nearly one-fifth of their value after the retailer reported a quarterly loss tied to weaker sales during the holiday period Wednesday evening.
Boeing Co.’s stock BA, +1.50% remained infocus after reports said U.S. officials believe the fatal crash of a Boeing 737-800 aircraft in Iran earlier this week was caused by Iranian missiles, and not from a technical fault. Shares rose 1.5%, reversing a chunk of the previous session’s decline.
Macy’s Inc.’s shares M, -2.15% fell about 2% after the retailer said it plans to shut nearly 30 locations after its sales fell during the holiday months.
HP Inc. HPQ, +1.48% again spurned a takeover bid by Xerox Holdings Corp. XRX, +1.86% in a terse letter Wednesday. Shares were up about 1.5%.
How did other markets trade?
Government bond rates ticked lower, with the yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -1.41% down 2 basis points to 1.85%.
In commodities markets, the price of a barrel of West Texas Intermediate crude oil for February delivery CLG20, -0.25% ended marginally lower after sliding 4.9% on Wednesday. As for precious metals, gold futures lost ground, with the February contract GCG20, -0.30% declining $5.90, or 0.4% to settle at $1554.30.
The U.S. dollar was up 0.1%, according to the ICE U.S. Dollar Index DXY, +0.09%, which tracks the U.S. unit against a basket of six major rivals.
In Asia overnight, stocks rallied. The China CSI 300 000300, -0.03% gained 1.3%, Japan’s Nikkei 225 NIK, +0.47% added 2.3% and Hong Kong’s Hang Seng Index HSI, +0.27% rose 1.7%.
European stocks were higher, with the Stoxx Europe 600 SXXP, +0.07% closing up 0.3%.