Stocks Rise Sharply After Trump Says He Talked With Xi
June 18 2019 - 5:05PM
Dow Jones News
By Alexander Osipovich and Nathan Allen
U.S. stocks rallied on Tuesday after President Donald Trump
signaled that trade talks with China had taken a turn for the
better.
The Dow Jones Industrial Average rose 353.01 points, or 1.4%, to
26465.54. The S&P 500 advanced 28.08 points, or 1%, to 2917.75,
while the Nasdaq Composite climbed 108.86 points, or 1.4%, to
7953.88.
Stocks opened moderately higher, then jumped after Mr. Trump
tweeted that he and his Chinese counterpart Xi Jinping had a "very
good telephone conversation" and would meet later this month in
Japan. The threat of a mounting trade conflict with China has
weighed on U.S. economic data and prompted uncertainty among
investors.
"It looks like the markets are getting excited about the
potential for some sort of agreement between Trump and China," said
Charlie Ripley, a strategist at Allianz Investment Management.
Technology stocks with significant Chinese exposure were among
the biggest gainers. Apple rose 2.4% to $198.45. Intel climbed 2.7%
to $47.37, while chip maker NVIDIA added 5.4% to close at
$152.88.
Industrials also outperformed. Construction-equipment maker
Caterpillar, whose shares are often seen as a bellwether for the
global economy, rose 2.4% to $130.33.
U.S. crude-oil futures surged 3.8% at $53.90 a barrel, their
biggest one-day gain since January, as trade tensions eased. That
boosted energy stocks, with Chevron rising 1.3% to $122.93 and
Exxon Mobil gaining 0.9% to close at $75.74.
Investors were also awaiting signals from the Federal Reserve on
whether it was leaning toward cutting interest rates at the end of
its two-day meeting on Wednesday.
Federal-funds futures indicated on Tuesday that investors saw an
85% chance of a rate cut in July, according to CME Group. But
strategists at Goldman Sachs, JPMorgan Chase & Co. and other
banks have warned that expectations of a summer rate cut were
overblown.
European stocks posted strong gains after European Central Bank
President Mario Draghi signaled the bank could roll out fresh
stimulus as soon as its next policy meeting in July.
Germany's DAX rose 2%, while the FTSE 100 climbed 1.2%. The
yield on 10-year German bunds declined, closing at a record low of
minus 0.320%, after Mr. Draghi said additional monetary stimulus
would be required if eurozone inflation doesn't improve. Yields
move in the opposite direction to prices.
Mr. Draghi's dovishness may help set the stage for a Fed rate
cut, said Jason Pride, chief investment officer of private wealth
at Glenmede. "It could give cover to the Fed," he said.
U.S. bond yields fell, pulled down by Mr. Draghi's comments and
expectations of a Fed rate cut. The yield on the benchmark 10-year
Treasury dropped to 2.060%, its sixth consecutive day of
declines.
The euro fell 0.2% against the dollar in response to the
European Central Bank chief's speech. Mr. Trump tweeted to say Mr.
Draghi's speech had weakened the euro, "making it unfairly easier
for them to compete against USA."
Most Asian markets posted modest gains, with Hong Kong's Hang
Seng Index rising 1%. Korea's Kospi rose 0.4%, but Japan's Nikkei
225 fell 0.7%.
Gold futures rose 0.6% to $1346.60 a troy ounce. The WSJ dollar
index, which measures the currency against a basket of its peers,
slipped 0.1%.
Write to Alexander Osipovich at
alexander.osipovich@dowjones.com
(END) Dow Jones Newswires
June 18, 2019 16:50 ET (20:50 GMT)
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