Trade Talks News Triggers Buying Interest on Wall Street
By Investors Hub
The major U.S. index futures are pointing to a higher opening on Thursday, with stocks likely to extend the strong upward move seen over the course of the previous session.
Early buying interest is likely to be generated in reaction to news that the U.S. and China plan to hold high level trade talks in early October.
A statement from China?s Commerce Ministry said both sides agreed to the new round of talks during a phone call between Chinese Vice Premier and chief trade negotiator Liu He and U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
?Both sides agreed they should work together and take practical actions to create favorable conditions for the negotiations,? China?s Commerce Ministry said, according to a CNBC translation.
A spokesperson for the U.S. Trade Representative?s office confirmed the phone call and said the U.S. and China agreed to hold meetings ?in the coming weeks.?
U.S. and Chinese officials will purportedly hold deputy-level talks later this month in preparation for the meeting in October.
A report from payroll processor ADP showing stronger than expected private sector job growth in August may also contribute to the positive sentiment.
?Businesses are holding firm on their payrolls despite the slowing economy,? said Mark Zandi, chief economist of Moody?s Analytics. ?Hiring has moderated, but layoffs remain low. As long as this continues recession will remain at bay.?
After gapping open notably higher, stocks saw some further upside over the course of the trading session on Wednesday. The rally on the day came on the heels of the sharp pullback seen on Tuesday.
The major averages ended the session near their best levels of the day. The Dow advanced 237.45 points or 0.9 percent to 26,355.47, the Nasdaq soared 102.72 points or 1.3 percent to 7,976.88 and the S&P 500 jumped 31.51 points or 1.1 percent to 2,937.78.
The initial strength on Wall Street reflected a positive reaction to developments overseas, including news that Hong Kong leader Carrie Lam has withdrawn a controversial extradition bill.
The bill, which would have allowed people in Hong Kong to be extradited to mainland China, sparked widespread protests across Hong Kong.
Positive sentiment was also generated in reaction to a report showing growth in China’s service sector accelerated in August despite broader economic headwinds.
Back in the U.S., the Commerce Department released a report showing the U.S. trade deficit narrowed in the month of July amid an increase in exports and a modest decrease in imports.
The Commerce Department said the trade deficit narrowed to $54.0 billion in July from a revised $55.5 billion in June.
Economists had expected the deficit to narrow to $53.5 billion from the $55.2 billion originally reported for the previous month.
The narrower trade deficit came as the value of exports climbed by 0.6 percent to $207.4 billion, while the value of imports edged down by 0.1 percent to $261.4 billion.
Stocks reached new highs following the release of the Federal Reserve’s Beige Book, which said the U.S. economy expanded at a modest pace through the end of August.
The Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, will be used by Fed officials to make their decision on interest rates at a two-meeting on September 17th and 18th.
The report noted continued concerns regarding tariffs and trade policy uncertainty but said the majority of businesses remain optimistic about the near-term outlook.
After turning in some of the market’s worst performances in the previous session, steel stocks showed a strong move back to the upside on the day.
Reflecting the strength in the sector, the NYSE Arca Steel Index surged up by 3.2 percent after tumbling by 2.6 percent on Tuesday.
Considerable strength was also visible among semiconductors stocks, as reflected by the 2.8 percent jump by the Semiconductor Index.
Oil service stocks also saw substantial strength on the day, benefiting from a sharp increase by the price of crude oil.
Computer hardware, gold and banking stocks also saw notable strength on the day, moving higher along with most of the other major sectors.