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Wall Street extends rally on U.S.-China trade optimism

Stock MarketsJan 18, 2019 03:06PM ET
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© Reuters. Traders work on the floor of the NYSE in New York

By April Joyner

NEW YORK (Reuters) - U.S. stocks rose on Friday as increased hopes that the United States and China would resolve their trade dispute lifted shares across sectors.

Wall Street moved higher after a Bloomberg report said China sought to raise its annual goods imports from the United States by a combined value of more than $1 trillion in order to reduce its trade surplus to zero by 2024.

The news followed a report on Thursday that U.S. Treasury Secretary Steven Mnuchin was considering lifting some or all tariffs imposed on Chinese imports. A Treasury spokesman denied Mnuchin had made any such recommendation.

With Friday's gains, the three main indexes were on their way to a fourth successive weekly advance. A strong rally in January has put the benchmark S&P 500 index on track for its best monthly gain since March 2016.

The S&P 500 is now 9 percent below its Sept. 20 record close after dropping 19.8 percent below that level - near the 20-percent threshold commonly considered to confirm a bear market - on Christmas Eve.

"It's risk-on again," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. "We've gotten an olive branch from China regarding trade. Obviously there's been a very positive reaction from the market."

Even so, Ghriskey said, relatively light trading volume this week indicated that some investors were still waiting on the sidelines.

"Trade negotiations are still uncertain, despite these olive branches," he said.

The Dow Jones Industrial Average (DJI) rose 280.1 points, or 1.15 percent, to 24,650.2, the S&P 500 (SPX) gained 29.08 points, or 1.10 percent, to 2,665.04 and the Nasdaq Composite (IXIC) added 57.63 points, or 0.81 percent, to 7,142.09.

U.S. stock markets will be closed on Monday for the Martin Luther King Jr. holiday.

Industrial stocks (SPLRCI) rose 1.7 percent, the most among the S&P 500's major sectors, while the Philadelphia SE semiconductor index (SOX) climbed 2.2 percent. Both groups of shares have been sensitive to trade developments.

Technology stocks (SPLRCT) were the biggest boost to the S&P 500, rising 1.2 percent, while the defensive utilities sector lagged.

Shares of Schlumberger NV (N:SLB) jumped 7.7 percent after the oilfield services provider reported quarterly revenue that beat estimates.

Shares of Netflix Inc (O:NFLX), however, fell 4.1 percent after the video-streaming company forecast lower-than-expected revenue for the first quarter.

Analysts have lowered their fourth-quarter earnings forecast for S&P 500 companies to 14.2 percent year-over-year growth from 20.1 percent estimated on Oct. 1, according to IBES data from Refinitiv.

Advancing issues outnumbered declining ones on the NYSE by a 2.63-to-1 ratio; on Nasdaq a 2.06-to-1 ratio favored advancers.

The S&P 500 posted three new 52-week highs and no new lows; the Nasdaq Composite recorded 30 new highs and 19 new lows.

Wall Street extends rally on U.S.-China trade optimism
 

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El Shen
El Shen Jan 18, 2019 7:06PM ET
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Either fake news to pop up the market OR the whitehouse is too naive to believe in the Chinese mega empty promise
Andrew Yaz
Andrew Yaz Jan 18, 2019 3:19PM ET
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This China-USA deal is such an artificial problem, regardless of their so-called resolution. The Trump Administration could have veered away from tariffs if they had their heads together... After nearly 10 years of growth, you cannot expect the economy to keep growing for much longer. Long-term trends are king here, not this brief international trade spat.
Kurt Maxberry
NeverShort Jan 18, 2019 2:12PM ET
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The harder it will fall.
Gabe Domen
Gabe Domen Jan 18, 2019 8:24AM ET
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Sounds that from the White house, since Christmas, exist a REAL interest to keep market momentum. Was PPT plus Fed plus News and finally the usually suspects that are keeping the indexes rolling. Now are fake news on China. Ok. Doesn't matter the bad news any more? Careful from here.
Tom OKray
Tom OKray Jan 18, 2019 8:24AM ET
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If there was there would not still be a government shutdown. Don't be so easily fooled.
Mark Hu
Mark Hu Jan 18, 2019 8:24AM ET
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Tom, re-read Gabe's entire comment.
Stu Warneski
Stu Warneski Jan 18, 2019 8:24AM ET
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Bcuz Trump needs to keep interest rates low for all the debt trump org holds
Andrew Yaz
Andrew Yaz Jan 18, 2019 8:24AM ET
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His English is subpar.
 
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