US Stocks Open Higher on Possible Trade Talks

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By Investors Hub

The major U.S. index futures are currently pointing to a higher opening on Friday, as traders express continued optimism about a potential de-escalation of the U.S.-China trade war.

The upward momentum on Wall Street comes as traders cling to hopes the U.S. and China will resume trade talks next month and finally reach an elusive trade deal.

President Donald Trump has repeatedly claimed the Chinese are desperate to reach an agreement, arguing the U.S. tariffs on Chinese goods are doing significant damage to the world?s second largest economy.

Trump told Fox News on Thursday that the U.S. and China were scheduled to hold talks at a ?different level,? although he did not clarify what that means.

Meanwhile, China has signaled that they do not currently intend to retaliate against Trump?s latest threat to raise the rate of tariffs on Chinese imports.

Chinese officials have expressed interest in negotiating an end to the escalating trade dispute but argued the U.S. has to create conditions for the two sides to resume talks on the basis of mutual respect.

After moving sharply higher early in the session, stocks saw some further upside over the course of the trading day on Thursday. The major averages managed to remain firmly positive after reversing direction from their initial moves in each of the two previous sessions.

The major averages pulled back off their best levels in late-day trading but held on to strong gains. The Dow surged up 326.15 points or 1.3 percent to 26,362.25, the Nasdaq soared 116.51 points or 1.5 percent to 7,973.39 and the S&P 500 jumped 36.64 points or 1.3 percent at 2,924.58.

The initial strength on Wall Street came on the heels of indications China is seeking to de-escalate the trade war with the U.S.

Chinese Ministry of Commerce spokesman Gao Feng indicated China does not currently intend to retaliate against President Donald Trump’s latest threat to raise the rate of tariffs on Chinese imports.

“We firmly reject an escalation of the trade war, and are willing to negotiate and collaborate in order to solve this problem with calm attitude,” Gao said, according to a CNBC translation.

Gao claimed China has plenty of countermeasures it could impose but will instead focus on removing Trump’s new tariffs, which were announced after China said it plans to impose tariffs on $75 billion worth of U.S. goods.

“The most important thing at the moment is to create necessary conditions for both sides to continue negotiations,” Gao told reporters during a weekly briefing.

On the U.S. economic front, the Labor Department released a report showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended August 24th.

The report said initial jobless claims inched up to 215,000, an increase of 4,000 from the previous week’s revised level of 211,000.

Economists had expected jobless claims to climb to 215,000 from the 209,000 originally reported for the previous week.

A separate report released by the Commerce Department showed the pace of growth in U.S. economic activity slowed by slightly more than initially estimated in the second quarter.

The Commerce Department said gross domestic product increased by 2.0 percent in the second quarter compared to the previously reported 2.1 percent growth. The downward revision came in line with economist estimates.

The downwardly revised GDP growth seen in the second quarter compares to the 3.1 percent jump in GDP reported for the first quarter.

Meanwhile, the National Association of Realtors also released a report showing a sharp pullback in pending home sales in the month of July.

NAR said its pending home sales index tumbled by 2.5 percent to 105.6 in July after surging up by 2.8 percent to 108.3 in June. The steep drop came as a surprise to economists, who had expected pending sales to come in unchanged.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Reflecting the optimism about a potential de-escalation of the U.S.-China trade war, steel stocks showed a significant move to the upside on the day.

The NYSE Arca Steel Index surged up by 2.4 percent, climbing further off the nearly three-year closing low set on Tuesday.

Significant strength was also visible among natural gas stocks, as reflected by the 2.6 percent jump by the NYSE Arca Natural Gas Index. The strength in the sector came as natural gas for October delivery climbed $0.067 to $2.289 per million BTUs.

Computer hardware, semiconductor, and transportation stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Meanwhile, gold stocks were among the few groups to buck the uptrend, dragging the NYSE Arca Gold Bugs Index down by 3.2 percent. The index ended the previous session at a nearly three-year closing high.

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