Stocks Climb as Trump Suggests a Trade Deal Is Near
December 12 2019 - 10:34AM
Dow Jones News
By Caitlin Ostroff and Alexander Osipovich
Stocks climbed Thursday after President Trump said on Twitter
that the U.S. and China are nearing a trade deal.
Major indexes opened slightly lower but jumped after Mr. Trump
tweeted, "Getting VERY close to a BIG DEAL with China. They want
it, and so do we!"
The Dow Jones Industrial Average gained 170 points, or 0.6%, to
28081 in early trading. The S&P 500 advanced 0.6%, while the
Nasdaq Composite climbed 0.5%.
The tweet came ahead of a Sunday deadline, in which a fresh
round of tariffs are set to go into effect on roughly $156 billion
of Chinese goods.
The Wall Street Journal reported Thursday morning that U.S.
negotiators offer to cut existing tariff rates by up to 50% on $360
billion of Chinese imports, citing people familiar with the matter.
The negotiators also offered to cancel the new tariffs set to take
effect on Dec. 15, those people said.
The tariffs, which threaten to deepen China's economic problems
and prompt retaliatory action, could weigh on prices of cellphones,
laptops and apparel for American consumers.
Investors sold government bonds in favor of riskier assets after
Mr. Trump's tweet. The yield on the 10-year U.S. Treasury note rose
to 1.840%, from 1.786% on Wednesday. Bond yields move in the
opposite direction from prices.
Investors are also closely watching the U.K.'s general election,
as voters go to the polls to determine whether Prime Minister Boris
Johnson will remain in office. The FTSE 100 was up 0.7%, outpacing
other European markets, while the pound fell 0.3% against the
dollar.
Politicians in both the major political parties are signaling an
end to years of constrained fiscal policy as the country prepares
to exit from the European Union, and the vote results will play a
crucial role in determining the course of Brexit. While a
parliamentary majority for the Conservative Party is seen as most
likely, recent polls have shown that Mr. Johnson's lead has
narrowed.
Earlier in the day, the European Central Bank under its new
President Christine Lagarde left interest rates unchanged at minus
0.5%.
On Wednesday, the U.S. Federal Reserve's policy makers indicated
that they believe interest rates are low enough to stimulate growth
in the world's largest economy as they opted to leave monetary
policy unchanged. The outlook is "a favorable one," Chairman Jerome
Powell said. The Fed's recent market interventions to keep
short-term rates stable are also working, he said.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com and
Alexander Osipovich at alexander.osipovich@dowjones.com
(END) Dow Jones Newswires
December 12, 2019 10:19 ET (15:19 GMT)
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