Wall Street bounces back on renewed trade optimism

Reuters NEW YORK | Updated on December 05, 2019

Wall Street rebounded on Wednesday as investor optimism got a boost from US President Donald Trump's remarks that talks with China on an interim trade deal were going “very well.”

All three major US stock indexes snapped a three-day losing streak with a broad-based rally, led by financial, healthcare and tariff-sensitive technology stocks.

Trump's comments supported a Bloomberg report that the world's two largest economies were closer to agreeing how many tariffs would be rolled back in a “phase one” trade deal.

Fears that a stalemate in negotiations could lead to new tariffs taking effect as scheduled on December 15 have dampened market participants' enthusiasm in recent days, with the major US stock averages falling back from last week's record highs.

Still, even as stock markets get whipsawed by daily trade developments, Doug Cote, senior portfolio manager at Voya Investment Management in New York, believes investors should not lose sight of solid underlying market fundamentals.

“Anything that happens on any day is because of trade, but it's a much richer mosaic underneath,” Cote said. “The consumer's on fire. That's what's behind the resilience in the market and this will be the best holiday season on record.” “Everyone sees this trade battle as World War Three, and it's not,” Cote added.

The Dow Jones Industrial Average rose 146.97 points, or 0.53 per cent, to 27,649.78, the S&P 500 gained 19.57 points, or 0.63 per cent, to 3,112.77 and the Nasdaq Composite added 46.03 points, or 0.54 per cent, to 8,566.67.

All 11 major sectors of the S&P 500 ended the session in positive territory, with energy enjoying the biggest percentage gain, boosted by a 4.0 per cent jump in crude prices.

Alphabet Inc rose 1.9 per cent following its announcement that Sundar Pichai would take the helm as CEO. Shares of Johnson & Johnson advanced 1.6 per cent after recent tests showed its baby powder was asbestos-free. US Food and Drug Administration investigations reported trace amounts of the carcinogen in the product earlier this year.

Online travel platform Expedia Group Inc jumped 6.2 per cent, among the top gainers on the S&P 500, after chair Barry Diller announced the resignations of the company's chief executive and financial officers.

On the economic front, market participants largely shrugged off weak November data from ADP, which reported fewer private payroll additions than expected, and from the Institute for Supply Management's PMI report, which showed the services sector's growth losing steam.

Investors are now eyeing the US Labour Department's November employment report, expected on Friday.

Advancing issues outnumbered declining ones on the NYSE by a 2.35-to-1 ratio; on Nasdaq, a 1.58-to-1 ratio favoured advancers. The S&P 500 posted 19 new 52-week highs and no new lows; the Nasdaq Composite recorded 63 new highs and 44 new lows.

Volume on US exchanges was 7.00 billion shares, compared with the 6.79 billion-share average over the last 20 trading days.

Published on December 05, 2019

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