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U.S. Stocks Fluctuate But Manage To Close Modestly Higher

wallstreet aug28 12sep19 lt

Following the strong upward move seen in previous session, stocks fluctuated over the course of the trading day on Thursday but largely maintained a positive bias. The major averages once again ended the session at their best closing levels in over a month.

The major averages came under pressure going into the close but remained in positive territory. The Dow edged up 45.41 points or 0.1 percent to 27,182.45, the Nasdaq climbed 24.79 points or 0.3 percent to 8,194.47 and the S&P 500 rose 8.64 points or 0.3 percent to 3,009.57.

Stocks fluctuated throughout much of the session as traders reacted to conflicting reports regarding an interim U.S.-China trade deal.

The major averages showed a notable move to the upside after a report from Bloomberg News said Trump administration officials have discussed offering an interim trade agreement to China.

Citing five people familiar with the matter, Bloomberg said the limited trade agreement would delay and even roll back some U.S. tariffs for the first time in exchange for Chinese commitments on intellectual property and agricultural purchases.

The people told Bloomberg some of President Donald Trump's top trade advisers have discussed the plan ahead of face-to-face negotiations with Chinese officials in the coming weeks.

However, stocks gave back ground after a senior White House official told CNBC the U.S. is "absolutely not" considering an interim trade deal.

The markets maintained a positive bias as President Donald Trump revealed in a post on Twitter that he is temporarily delaying raising tariffs on $250 billion worth of Chinese imports.

Calling the move a "gesture of good will," Trump delayed raising the tariffs rate from 25 percent to 30 percent from October 1st to October 15th.

Trump said in a separate tweet that China is expected to purchase large amounts of U.S. agricultural products, although the Chinese have not followed through on previous pledges.

Treasury Secretary Steven Mnuchin claimed in an interview with CNBC that Trump could strike a trade deal with China at "any time" but only wants to do a "good deal."

"President Trump is only going to agree to a deal if it's a good deal, a deal that's good for U.S. companies and U.S. workers," Mnuchin said.

Positive sentiment was also generated in reaction to the European Central Bank's monetary policy decision, with the ECB cutting rates and announcing a massive new bond-buying program.

The ECB lowered its main deposit rate by 10 basis points to 0.50 percent and announced plans to restart its quantitative easing program by purchasing assets at a pace of 20 billion euros per month beginning November 1st.

The central bank said it expects to keep interest rates at their present or lower levels until it has seen a sufficient increase in the inflation outlook.

Nonetheless, buying interest was subdued, as a report from the Labor Department showed the annual rate of core consumer price growth accelerated to an eleven-year high of 2.4 percent in August.

"The further rise in core CPI inflation to an 11-year high of 2.4% in August won't stop the Fed from cutting interest rates again next week," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, "But it does provide further reason to believe that market expectations of significant further easing will ultimately be disappointed."

Despite the advance by the broader markets, most of the major sectors finished the session showing only modest moves.

Chemical and steel stocks saw some strength on the day, while energy stocks moved to the downside along with the price of crude oil.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index and China's Shanghai Composite Index both climbed by 0.8 percent, although Hong Kong's Hang Seng Index bucked the uptrend and dipped by 0.3 percent.

The major European markets also moved to the upside following the ECB announcement. While the U.K.'s FTSE 100 Index inched up by 0.1 percent, the German DAX Index and the French CAC 40 Index both rose 0.4 percent.

In the bond market, treasuries showed a notable downturn over the course of the session after seeing initial strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.8 basis points to 1.791 percent.

Looking Ahead

Reports on retail sales and consumer sentiment are likely to be in focus on Friday, as strength in consumer spending has recently helped prop up the U.S. economy amid signs of weakness in other sectors.

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