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U.S. Stocks Rebound Amid Renewed Optimism About Trade Talks

wallstreet nov02 09oct19 lt

Reflecting the intense focus on upcoming U.S.-China trade talks, stocks have shown a strong move back to the upside in morning trading on Wednesday. The major averages are rebounding following the sharp pullback seen late in the previous session.

Currently, the major averages are hovering firmly in positive territory. The Dow is up 150.98 points or 0.6 percent at 26,315.02, the Nasdaq is up 69.10 points or 0.9 percent at 7,892.88 and the S&P 500 is up 21.32 points or 0.7 percent at 2,914.38.

The rebound on Wall Street comes after a report from Bloomberg News said China is still open to reaching a partial trade deal with the U.S.

An official with direct knowledge of the talks told Bloomberg that negotiators aren't optimistic about securing a broad agreement to end the U.S.-China war but said China would accept a limited deal as long as President Donald Trump does not impose any more tariffs.

In return, the official told Bloomberg, Beijing would offer non-core concessions like purchases of agricultural products without giving in on major sticking points.

The positive reaction to the report reflects the intense focus on the next round of high-level trade talks set to begin on Thursday.

News the Trump administration imposed visa restrictions on Chinese officials over abuses of Muslim minorities contributed to the late-day sell-off on Tuesday amid concerns about the move's impact on the talks.

Optimism about the trade talks had already waned after a report from the South China Morning Post said China is subtly toning down expectations ahead of the negotiations.

News the U.S. has expanded its trade blacklist to include some of China's top artificial intelligence firms also cast a shadow over the talks along with a Bloomberg report the White House is discussing blocking government pension funds from investing in China.

Nonetheless, overall trading activity is somewhat subdued as traders look ahead to the release of the minutes of the Federal Reserve's latest monetary policy meeting.

The minutes may shed additional light on the Fed's decision to cut interest by 25 basis points in September and provide clues about the outlook for future rate cuts.

Semiconductor stocks are rebound after turning in some of the market's worst performances in the previous session, with the Philadelphia Semiconductor Index climbing by 1.7 percent. The index is bouncing off its lowest closing level in over a month.

Significant strength has also emerged among software stocks, as reflected by the 1.4 percent gain being posted by the Dow Jones U.S. Software Index.

Oil, transportation, and computer hardware stocks are also seeing notable strength, moving higher along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Wednesday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index fell by 0.6 percent and 0.8 percent, respectively, although China's Shanghai Composite Index bucked the downtrend and rose by 0.4 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the German DAX Index has jumped by 1 percent, the French CAC 40 Index is up by 0.7 percent and the U.K.'s FTSE 100 Index is up by 0.4 percent.

In the bond market, treasuries are moving lower amid renewed optimism about the U.S.-China trade talks. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.1 basis points at 1.558 percent.

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