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Stocks - S&P Surges as Trade Tensions and Recession Fears Fade

Stock MarketsAug 19, 2019 05:25PM ET
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Investing.com - Stocks surged for a third-straight day on optimism about a U.S.- China trade deal and fewer worries about a recession hitting any time soon.

With Monday's rally, the major averages have recovered most of the losses suffered in last week's wild gyrations.

The S&P 500 was up 1.2%, and the Dow Jones industrials rose nearly 1%. The Nasdaq Composite jumped 1.35% and moved above 8,000 for the first time in four sessions.

Chip stocks led technology shares higher after the Trump Administration extended its reprieve on penalties for doing business with Huawei, the Chinese telecommunications equipment company. The Philadelphia Semiconductor Index rose nearly 1.9%. Nvidia (NASDAQ:NVDA) and Micron Technology (NASDAQ:MU) were the leaders.

That was about the only real news on the China-U.S. trade fight, but it was good enough.

Twenty-eight of the 30 Dow stocks were higher, led by Cisco Systems (NASDAQ:CSCO) and chemical maker Dow Inc (NYSE:DOW). At their highs in the morning, the blue chips were up as many as 336 points.

The tech-dominated Nasdaq 100 index, up 115 points, or 1.52%, was led by Chinese internet retailer Baidu (NASDAQ:BIDU), Nvidia and Wynn Resorts (NASDAQ:WYNN), one of the biggest players in Macau.

In addition, oil prices moved higher on hopes that any kind of deal could boost oil demand. West Texas Intermediate crude was up $1.33 to $56.14 a barrel on Monday. Brent crude, the global benchmark, was up $1.10 to $59.74. WTI is still down more than 15% from its $66.30 peak in April.

The demand for stocks pulled interest rates higher, with the 10-Year Treasury yield rising 4.4% to 1.608%, its highest level since Aug. 13. The 2-Year Treasury yield rose to 1.549%.

Since Wednesday's shocking selloff that saw the Dow fall about 800 points, the blue-chip index is up 2.6%. The S&P 500 has rebounded 2.92% and the Nasdaq Composite has risen 2.94%.

Volatility has dominated markets as the worries have intensified about the economic impact of the U.S.-China trade battle. It has affected business in both countries. Electronics companies have become especially vulnerable to the shifting political winds. U.S. farmers have been stressed because China has been their largest export market. While the two sides are starting to communicate, no deal is expected until next year at the earliest.

In the 14 trading days so far in August, the Dow has experienced nine days with gains or losses of at least 239 points. The S&P 500 has moved up or down 1% or more on eight occasions and the Nasdaq has seen eight days of 100-point gains or losses.

There is plenty of opportunity for more volatility over the next four weeks with earnings reports expected from Home Depot (NYSE:HD), Kohl's (NYSE:KSS), Lowe’s (NYSE:LOW), Target (NYSE:TGT), Nordstrom (NYSE:JWN) and Dick’s Sporting Goods (NYSE:DKS).

There will also be minutes from the Federal Reserve's July meeting due Wednesday and every word uttered at the Fed's annual retreat in Jackson Hole. Wyo., will be scrutinized. All of this will lead up to the Fed's September meeting when the central bank is expected to trim its key federal funds rate.

While bond markets have been signaling the potential of a recession in the next year or two, it's not clear if consumers are paying much attention.

Lastly, watch to see if the major averages can hit new highs. So far, new highs in the last two years have been met by near-immediate selloffs.

Winners and Losers in the S&P 500

Estee Lauder (NYSE:EL), Nvidia and Wynn were among the top S&P 500 performers on Monday.

Alliance Data Systems (NYSE:ADS), which organizes concepts like brand-centric bank credit card programs, health insurer DaVita HealthCare Partners (NYSE:DVA) and troubled conglomerate General Electric (NYSE:GE) were among the worst-performing stocks.

Stocks - S&P Surges as Trade Tensions and Recession Fears Fade
 

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Comments
Abdussalam Ismail
Abdussalam Ismail Aug 20, 2019 5:21AM ET
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Hello sir good afternoon How are you doing today How you work
Ross Drennan
Ross Drennan Aug 19, 2019 10:11PM ET
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Yeah... do the editors read these comments? People are tired of the same ol’ need to label and decipher every move in the market.... “trade war fear, rate cut hope, etc...”. It’s tiring. Do we really think recession fears are really behind us? No! This was a technical bounce. Not much more.
Deepak Mehta
Deepak Mehta Aug 19, 2019 10:11PM ET
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These are meant for bots to mislead
Jun Man
Jun Man Aug 19, 2019 9:09PM ET
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We're recycling news now, just changing the date...
Patrick Mueller
Patrick Mueller Aug 19, 2019 8:15PM ET
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day by day gets more impossible to cope, I feel like I'm the one that's doing dope
Cindy Morgan
Cindy Morgan Aug 19, 2019 8:15PM ET
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once little poek
Cindy Morgan
Cindy Morgan Aug 19, 2019 8:15PM ET
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**poem
Sunil Singh
Sunil Singh Aug 19, 2019 6:32PM ET
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How can recession fears if well founded can fade in a week?
Neadom Medina
Neadom Medina Aug 19, 2019 6:32PM ET
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I'm thinking the same thing.
John van Leeuwen
John van Leeuwen Aug 19, 2019 6:32PM ET
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Calling for 1.5 percent growth in 2020. Ression fears not for 2019
Vladimir Pupkin
Vladimir Pupkin Aug 19, 2019 6:32PM ET
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Vladimir Pupkin
Vladimir Pupkin Aug 19, 2019 6:32PM ET
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Ndawinovenji Ihepaali
Ndawinovenji Ihepaali Aug 19, 2019 6:15PM ET
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anyone trading volatility75? please let's come together
jonah gaff
jonah gaff Aug 19, 2019 4:39PM ET
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literally trying to make fluff pieces about the economy is not going to save it this is all about math not how the people feel.
John van Leeuwen
John van Leeuwen Aug 19, 2019 4:39PM ET
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Wrong, the stock market is about how people feel not about math. But if your an math nut, calling for 1.5 percent growth in 2020... us markets. Some interpret that as markets going at least 1.5 percent higher. We could have all time highs, were on the way back up for now.
Tubsy SkinntFinger
TubsSkinnyFinger Aug 19, 2019 4:39PM ET
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John van Leeuwen 1.5 percent growth through percent higher debt
Nick Biss
Nick Biss Aug 19, 2019 4:38PM ET
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Volume was well below average
Chudhary Waqas
Chudhary Waqas Aug 19, 2019 4:22PM ET
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Down or up ???
Jenia Golbstein
Jenia Golbstein Aug 19, 2019 4:11PM ET
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tomorrow: s&p thumbles as recession fears grip wall street
Dough Boy
Dough Boy Aug 19, 2019 4:11PM ET
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lol
Steven Ownz
Turtle_Steven Aug 19, 2019 4:11PM ET
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then day after switch again... easy reporting job.
 
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