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Wall Street rallies on hopes of global economic stimulus

Stock MarketsAug 19, 2019 05:26PM ET
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© Reuters. Traders work on the floor at the New York Stock Exchange (NYSE) in New York

By April Joyner

NEW YORK (Reuters) - U.S. stocks climbed on Monday as reports of stimulus efforts in China and Germany calmed fears of a severe downturn in the global economy that were stoked last week as bond yields fell.

The benchmark S&P 500 has recovered most of its losses following Wednesday's brief inversion of the yield curve between 2-year and 10-year Treasuries, commonly viewed as an indicator of a recession within the next two years. After falling nearly 3% on Wednesday, the S&P 500 has risen for the last three sessions.

China's central bank unveiled a key interest rate reform on Saturday to help steer borrowing costs lower for companies. On Sunday, German Finance Minister Olaf Scholz suggested that Berlin could make available up to 50 billion euros ($55 billion) of extra spending.

"Those are positive stories, and it's fostered a risk-on environment that has persisted throughout the day," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. "Investors are glad to see that countries are recognizing the risks out there."

After the market close, the Washington Post reported that White House officials have discussed the possibility of a temporary payroll tax cut to spur the U.S. economy, joining other global economic stimulus efforts.

Stocks also received a boost as Washington extended by 90 days the window during which China's Huawei Technologies, blacklisted by the U.S. government in May, can buy components from U.S. companies to supply existing customers.

Shares of Apple Inc (O:AAPL) rose 1.9% to provide the biggest boost to the Nasdaq and the second-largest boost to the S&P 500 and the Dow. President Donald Trump said on Sunday that he had spoken with Apple Chief Executive Officer Tim Cook, who "made a good case" that tariffs could hurt Apple.

The S&P 500 technology index rose 1.6%, while the Philadelphia semiconductor index (SOX) rose 1.9%.

"You're really seeing some of the trade-sensitive names doing better," said Chris Zaccarelli, chief investment officer of Independent Advisor Alliance in Charlotte, North Carolina. "It's put a boost under risk assets today."

The Dow Jones Industrial Average (DJI) rose 249.78 points, or 0.96%, to 26,135.79, the S&P 500 (SPX) gained 34.97 points, or 1.21%, to 2,923.65 and the Nasdaq Composite (IXIC) added 106.82 points, or 1.35%, to 8,002.81.

All of the 11 major S&P sectors were higher. Energy shares (SPNY), which rose 2.1% as oil prices advanced, led S&P sectors in percentage gains. Reflecting Monday's risk-on sentiment, defensive sectors such as real estate <.SPLRCR> and utilities (SPLRCU) lagged the broader index in percentage gains.

Given concerns about economic growth, investors have looked closely for cues from the Federal Reserve on monetary policy. In July, the U.S. central bank cut interest rates for the first time in more than a decade.

Wednesday's release of minutes from the Fed's July policy meeting, as well as Chair Jerome Powell's speech at the Jackson Hole symposium on Friday, might provide indications on whether the central bank will cut rates further, investors said.

Shares of Estee Lauder Cos Inc (N:EL) jumped 12.5% to a record high as the beauty company forecast full-year revenue and profit above estimates, bolstered by booming demand for its premium skincare products in the Asia-Pacific region.

Advancing issues outnumbered declining ones on the NYSE by a 2.81-to-1 ratio; on Nasdaq, a 2.45-to-1 ratio favored advancers.

The S&P 500 posted 57 new 52-week highs and one new low; the Nasdaq Composite recorded 78 new highs and 60 new lows.

Volume on U.S. exchanges was 6.28 billion shares, compared to the 7.58 billion average for the full session over the last 20 trading days.

Wall Street rallies on hopes of global economic stimulus
 

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Aug 20, 2019 4:52AM ET
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Really?
Tim Lee
Tim Lee Aug 19, 2019 4:23PM ET
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Traders, be careful about this site.Reuters is like my fmr home Communist China state run media.Agenda oriented. Economy is booming
Tim Lee
Tim Lee Aug 19, 2019 4:21PM ET
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Advance/decline 3.68: 1
Robert Cochran
Robert Cochran Aug 19, 2019 4:06PM ET
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Trump know$ what he is doing!
Jun Man
Jun Man Aug 19, 2019 11:46AM ET
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Trump is a reality TV president! He will drive our economy to the ground!
Robert Cochran
Robert Cochran Aug 19, 2019 11:46AM ET
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Trump is a great American Patriot. Thomas Jefferson, Benjamin Franklin, John Hancock, Donald Trump.
Aug 19, 2019 11:46AM ET
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Aug 19, 2019 11:46AM ET
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Great
Alex Gaitan
Alex Gaitan Aug 19, 2019 9:44AM ET
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Wall Street Opens Higher on "HOPES" really? Enough of this Hopes and rumors stuff, this market needs to and will go down only, this is getting old, recession and downtrend should happen within the next few weeks or months, " The Market Can Run but Cant Hide " from correction...
Jason Chang
Jason Chang Aug 19, 2019 9:44AM ET
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Good luck on shorting! If everyone knows when recession comes, then everyone would be millionaire! Be realistic
Rodolfo Jara Muñoz
Rodolfo Jara Muñoz Aug 19, 2019 9:44AM ET
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Jason Changbut it´s realistic, there is a lot of data that sends that message, the trade war it´s not going to stop now (Trump still can´t get what he wants from china so is a pressure excersice that can last for a year more). A lot of industrial countries have a decrease in sales and production like Germany (in that case even a negative growth) and there is the problem with Hong Kong and the protest that affected Asian finances, and some countries in Latinamerica (the biggest ones) are already in reccesion. You can´t know when is going to come, but all the signs says that we are in the verge of something.
Jason Chang
Jason Chang Aug 19, 2019 9:44AM ET
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No worries. Nothing can't be dealt with a bottle of iced corona. Sit tight and enjoy amigo
Hank Williams
Hank Williams Aug 19, 2019 9:44AM ET
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Hilarious that the basis of WS trading is on a president you can't believe.
 
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