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U.S. Stocks Jump After Trump Tweets Plans To Meet With Chinese Vice Premier

wallstreet aug27 10oct19 lt

After initially showing a lack of direction, stocks have moved notably higher over the course of morning trading on Thursday. With the upward move, the major averages are extending the rally seen in the previous session.

The major averages have moved roughly sideways in recent trading, hovering firmly in positive territory. The Dow is up 170.58 points or 0.7 percent at 26,516.59, the Nasdaq is up 51.33 points or 0.7 percent at 7,955.07 and the S&P 500 is up 18.79 points or 0.6 percent at 2,938.19.

Buying interest emerged on Wall Street after President Donald Trump revealed he plans to meet with Chinese Vice Premier Liu He as part of high-level U.S.-China trade talks.

"Big day of negotiations with China. They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House," Trump tweeted.

The tweet from Trump offset concerns generated by reports suggesting Liu could leave Washington earlier than originally planned.

Adding to the positive sentiment, Liu told Chinese state-run media Xinhua the Chinese delegation has come to the talks with "great sincerity and is willing to make serious exchanges with the U.S. on issues of common concern."

"On the basis of equality and mutual respect, China is willing to reach consensus with the U.S. through this round of consultations on issues of mutual concern to prevent further escalation and spread of friction," Liu said.

Traders are likely to remain focused on reports regarding the highly anticipated negotiations and any signs of progress or lack thereof.

As a result of the focus on the trade talks, traders have largely shrugged off a usually closely watched report from the Labor Department showing U.S. consumer prices were essentially flat in the month of September.

The Labor Department said its consumer price index was unchanged in September after inching up by 0.1 percent in August. Economists had expected another 0.1 percent uptick.

Consumer prices came in unchanged as higher prices for shelter and food were offset by declines in prices for energy and used cars and trucks.

Excluding food and energy prices, core consumer prices crept up by 0.1 percent in September after rising by 0.3 percent for three straight months. Core prices had been expected to rise by 0.2 percent.

"The muted gain in core consumer prices in September underlines that even after the introduction of additional tariffs on Chinese imports, inflationary pressures are still well-contained," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

"With wage growth leveling off and unit labor costs growth stable, we don't think core inflation will rise further from here," he added. "As a result, the Fed will remain focused on the incoming activity data, which we expect to prompt one more 25bp rate cut by year-end."

A separate report released by the Labor Department showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended October 5th.

Steel stocks have moved sharply higher amid optimism about the U.S.-China trade talks, with the NYSE Arca Steel Index surging up by 2.9 percent.

Significant strength has also emerged among banking stocks, as reflected by the 1.8 percent gain being posted by the KBW Bank Index.

Semiconductor, brokerage, and computer hardware stocks are also seeing notable strength, while gold stocks are bucking the uptrend once again.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index rose by 0.5 percent, while China's Shanghai Composite Index advanced by 0.8 percent.

The major European markets have also moved to the upside over the course of the session. While the French CAC 40 Index has jumped by 1 percent, the German DAX Index is up by 0.5 percent and the U.K.'s FTSE 100 Index is up by 0.3 percent.

In the bond market, treasuries have moved notably lower over the course of the morning. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 5.7 basis points at 1.646 percent.

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