By Chris Matthews, MarketWatch , Sunny Oh
Fed to buy $60 bln Treasury bills per month into 2020
U.S. stocks notched significant gains Friday, though they closed
off session highs, after reports that the U.S. and China had
reached an agreement to ease trade tensions that includes the
elimination of at least some planned tariffs.
How did the benchmarks perform?
The Dow Jones Industrial Average rose 319.92 points, or 1.2%, to
26,816.59, the S&P 500 index advanced 32.14 points, or 1.1%, to
2,970.27, while Nasdaq Composite Index gained 106.26 points, or
1.3%, to 8,057.04.
At session highs, the Dow had risen 517.30 points, or 2%, the
S&P 500 had gained 55.15 points, or 1.9%, while the Nasdaq had
added 165.01 points, or 2.1%.
For the week, the Dow rose 0.9%, while the S&P 500 and
Nasdaq added 0.6% and 0.9% respectively.
What drove the stock market?
President Trump said that the U.S. and China had reached a
"substantial, phase-one" deal to ease trade tensions that will
include Chinese promises to buy $40 - $50 billion more U.S.
agricultural products in exchange for eliminating a planned
increase in tariffs that had been set to into effect Tuesday Oct.
15.
No decision has been made yet on planned on a new 15% tariff set
to go into effect on Dec. 15 on about $160 billion in annual
Chinese imports.
The president's statement came just minutes before the close of
trade Friday.
(http://www.marketwatch.com/story/trump-says-us-and-china-have-substantial-phase-one-deal-on-trade-2019-10-11)The
agreement will take three to five weeks to finalize and will also
include "certain intellectual property measures" and other promises
on the part of the Chinese related to its currency management,
Trump said after a meeting with Mr. Liu in the White House
(https://www.wsj.com/articles/trump-strikes-upbeat-notes-on-trade-talks-11570804097?mod=hp_lead_pos1).
The news was expected by investors after President Donald Trump
tweeted that 'good things are happening
(https://twitter.com/realDonaldTrump/status/1182654371714211840)'
at the trade negotiations.
The Wall Street Journal reported
(https://www.wsj.com/articles/trump-to-meet-with-china-s-top-trade-negotiator-on-friday-11570716458?mod=article_inline)that
terms for a possible tentative deal could also include a joint pact
to deter Beijing from devaluing its currency, and, on the U.S.
side, relaxing export bans against blacklisted Chinese telecom
giant Huawei Technologies Co.
(http://www.marketwatch.com/story/trump-says-hell-meet-with-chinese-vice-premier-on-friday-2019-10-10)"The
US and China were able to make a partial deal, setting up hopes for
a prolonged trade truce, wrote Edward Moya, senior market analyst
at Oanda. "The positive trade update took US stocks higher and is
putting the pressure on safe-havens . . .US equities could resume
the march toward uncharted territory if we see continued a
de-escalation in all tariffs over the coming weeks."
China overnight Friday set a timetable for opening its finance
industries
(https://www.apnews.com/3e0a248000c64959abd24916f2de6953). The
China Securities Regulatory Commission said Friday overseas
financial service companies in futures, securities and mutual funds
will be able to apply for total control of onshore ventures
starting in 2020. The move came as the country speeds up its
financial markets opening.
On the data front, University of Michigan's preliminary consumer
sentiment report came in at 96, above economists' estimates for a
reading of 92, according to Econoday. Meanwhile, the import price
index
(http://www.marketwatch.com/story/import-inflation-climbs-in-september-on-higher-cost-of-oil-but-most-prices-still-tame-2019-10-11)climbed
0.2% last month, the government said Friday. The cost of goods
imported into the U.S. rose in September for the first time in four
months, but most of the increase stemmed from higher oil
prices.
Sentiment was also buoyed after the Federal Reserve announced
that it would buy $60 billion of Treasury bills every month
(http://www.marketwatch.com/story/fed-says-it-will-start-to-buy-treasury-bills-next-week-to-ease-money-market-pressure-2019-10-11-1191242)
at least into the second-quarter, starting from next week. The
central bank also said it would conduct overnight repurchase
agreements at least through January of next year in order to reduce
pressures in funding markets.
Meanwhile, investors were parsing a speech by Boston Fed
President Eric Rosengren
(https://www.bostonfed.org/news-and-events/press-releases/2019/statement-of-eric-s-rosengren.aspx)
-- one of three dissenters in the Fed's last decision -- who
continued to emphasize his skepticism of Fed easing, telling an
audience Madison, Wis. that "my view is that policy makers can be
patient and continue to evaluate incoming data before taking
additional action."
See also: Bank stocks surge as U.S.-China trade hopes lift
Treasury yields
(http://www.marketwatch.com/story/bank-stocks-surge-as-us-china-trade-hopes-lift-treasury-yields-2019-10-11)
Which stocks were in focus?
Shares of Apple Inc.(AAPL) advanced 2.7% to a new record close
after analysts at Wedbush raised its stock price target to $265
from $245. If the stock closes above $232.07, it will set a new
all-time high.
The stock for Voxx International Corp.(VOXX) fell 0.9% even
after the technology manufacturer reported that its operating
losses fell in the first half of the year.
Shares of Wendy's Co. (WEN) rose 4% Friday after the fast-food
retailer announced third-quarter same-store sales that beat
expectations, while raising its dividend.
Shares of Bed Bath & Beyond(BBBY) advanced 7.4% after it
named Target Corp.'s(TGT) head of merchandising as its new chief
executive.
How did other assets trade?
The yield on the 10-year U.S. Treasury note
(http://www.marketwatch.com/story/treasury-yields-climb-on-signs-of-progress-towards-us-china-trade-deal-2019-10-11)
climbed to 1.737%, compared with 1.649% on Thursday.
(http://www.marketwatch.com/story/gold-edges-higher-ahead-of-trade-talks-2019-10-09)Gold
futures held below
(http://www.marketwatch.com/story/gold-prices-sink-1-at-low-heading-for-sharpest-weekly-skid-in-nearly-a-year-2019-10-11)
the psychologically significant level at $1,500. December gold fell
$12.20, or 0.8%, to settle at $1,488.70 an ounce.
West Texas Intermediate crude for November delivery climbed
$1.15, or 2.2%, to settle at $54.70 a barrel on the New York
Mercantile Exchange, after an oil tanker attack in the Middle East
(http://www.marketwatch.com/story/oil-prices-jump-after-reports-of-iranian-tanker-blast-2019-10-11).
In Asia overnight Friday, Hong Kong's Hang Seng Index surged
2.3% to 26,308.44, the China CSI 300 rose 1% to reach 3,911.73, and
Japan's Nikkei 225gained 1.2% to 21,798.87. The Stoxx Europe 600,
meanwhile, closed 2.3% higher to 391.61. And the FTSE 100 gained
0.3% to 7,186.36, even as the pound jumped 1.8% against the dollar,
amid renewed Brexit optimism
(http://www.marketwatch.com/story/uk-stocks-drift-before-trade-talks-as-gdp-edges-lower-in-august-2019-10-10).
-- Mark Decambre contributed to this report.
(END) Dow Jones Newswires
October 11, 2019 16:59 ET (20:59 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Aug 2024 to Sep 2024
FTSE 100
Index Chart
From Sep 2023 to Sep 2024