Easing Trade Tensions May Lead to Strength on Wall Street


By Investors Hub

The major U.S. index futures are pointing to a higher opening on Monday, with stocks likely to add to the strong gains posted last week.

Early buying interest may be generated amid easing trade tensions ahead of a second round of trade talks between the U.S. and China this week.

Ahead of the meeting, President Donald Trump indicated in a post on Twitter that he is working with Chinese President Xi Jinping to get Chinese telecom equipment maker ZTE Corp. ?back into business, fast.?

ZTE has been crippled by a ban on U.S. supplies to its business, and sources briefed on the matter told Reuters that China has demanded the issue be resolved as a prerequisite for broader trade negotiations.

In a subsequent tweet, Trump expressed optimism about trade talks with China despite claiming past negotiations have been one-sided in favor of Beijing.

?China and the United States are working well together on trade, but past negotiations have been so one sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries,? Trump tweeted. ?But be cool, it will all work out!?

Overall trading activity may be somewhat subdued, however, with a lack of major U.S. economic data likely to keep some traders on the sidelines.

After moving notably higher over the course of trading last Wednesday and Thursday, stocks turned in a lackluster performance during trading on Friday. The major averages spent the day bouncing back and forth across the unchanged line.

The Dow and the S&P 500 reached their best closing levels in nearly two months, but the Nasdaq closed marginally lower. While the Nasdaq edged down 2.09 points or less than a tenth of a percent to 7,402.88, the Dow climbed 91.64 points or 0.4 percent to 24,831.17 and the S&P 500 rose 4.65 points or 0.2 percent to 2,727.72.

Despite the mixed performance on the day, the major averages all moved sharply higher for the week. The Nasdaq surged up by 2.7 percent, and the Dow and the S&P 500 jumped by 2.3 percent and 2.4 percent, respectively.

The markets initially benefited from the upward momentum seen in the two previous sessions, but buying interest waned as traders seemed wary of continuing to pick up stocks.

Traders were also digesting President Donald Trump’s outline of his plan to reduce high drug prices, which he has previously described as a top priority for his administration.

In remarks from the White House rose garden, Trump suggested the government was partly to blame for high drug prices but also criticized drug lobbyists and so-called “middle men.”

Trump announced several steps his administration will take to reduce drug prices, including giving Medicare Part D plans better tools to negotiate discounts.

Reports earlier in the day indicated Trump’s reforms of Medicare would stop short of allowing the government to negotiate directly with drug makers.

The president also indicated he would seek to increase competition in drug markets, develop new incentives for drug makers to lower list prices and develop options to lower patients’ out-of-pocket spending.

On the U.S. economic front, the Labor Department released a report showing import prices increased by less than expected in the month of April.

The Labor Department said import prices rose by 0.3 percent in April after edging down by a revised 0.2 percent in March. Economists had expected import prices to climb by 0.5 percent.

Meanwhile, the report said export prices increased by 0.6 percent in April after rising by 0.3 percent in March. Export prices had been expected to rise by another 0.3 percent.

A separate report released by the University of Michigan showed consumer sentiment unexpectedly held steady in early May.

The report said the preliminary reading on the consumer sentiment index for May came in at 98.8, unchanged from the final April reading. Economists had expected the index to edge down to 98.5.

Many of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Biotechnology stocks showed a significant move to the upside, however, with the NYSE Arca Biotechnology Index jumping by 1.8 percent.

Healthcare and pharmaceutical stocks also saw considerable strength as traders reacted to Trump’s plan to reduce drug prices.

On the other hand, tobacco stocks moved notably lower on the day, dragging the NYSE Arca Tobacco Index down by 1 percent.

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