Dow Jones Stocks: Dow traded higher on China Optimism
On Monday- the first day of the quarter, U.S stocks traded higher. Wall Street scored an apparent boost from better-than-expected economic reports in the U.S and China. It momentarily allayed fears of flagging economic growth.
According to FactSet data, the Dow Jones Industrial Average DJIA, +1.27% jumped 301 points or 1.2% to 26,236, on pace for its daily gain since Feb 15. The s&P 500 Index SPX, +1.16% climbed 30 points, or 1.1%, to 2,865 with the financial sector advancing 1.8%. The Nasdaq Composite Index COMP, +1.29% gained 91 points, or 1.2%, to 7,820.
Positive global economic reports in the U.S. and China are helping to foster a strong start for the second quarter.
Fresh hopes for a U.S-China trade deal partly drove Friday’s bullish stocks session and end to the first quarter. It was after Steven Mnuchin – the Treasury Secretary tweeted that “constructive” discussions between China’s trade envoy and U.S. officials.
On Sunday, China’s State Council said it would suspend additional tariffs on U.S. autos and auto parts. According to Reuters, the suspension is in a bid to help “create a good atmosphere for the continuing trade negotiations between both sides,” Talks will resume in Washington on Wednesday, with Vice Premier Liu He leading the Chinese delegation.
According to strategists, “Ignoring some ropy retail sales data, the Dow Jones joined its European peers in a hopeful, sunny start to the second quarter,” wrote Connor Campbell, a financial analyst with Spreadex.
“World markets are rallying on the first trading day of a new week, month, and quarter, propelled upward by positive readings on the world economy. China-sensitive markets have been leading the charge with Shanghai soaring…” wrote Colin Cieszynski, chief market strategist at SIA Wealth Management, in a Monday research note.
Dow Jones Stocks: Stocks rally as financials surge on easing global growth worries
On Monday, stocked surged, led by financials on the back of higher U.S Treasury yields as positive manufacturing data from the US and China eased investors’ worries about slowing global growth.
The Dow Jones Industrial Average rose 1.27%, the S&P 500 added 1.16%, while the Nasdaq Composite rallied 1.29%.
Financials, mostly banks, racked up gains as 10-Year bond yields rose more than 3%. The better-than-expected manufacturing data from China and the U.S. prompted traders to bet global growth is set for a soft landing.
Rising government bond yields boost banks’ ability to generate net interest income. The Financial Select Sector SPDR (NYSE:XLF) ETF rose 2.5%, with JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Bank of America (NYSE:BAC) closing more than 3% higher.
The positive manufacturing data overshadowed an unexpected decline in U.S. retail sales, led by a slump in transactions for building materials and garden supplies.
Industrials also underpinned the broader market on improving sentiment on trade after China reportedly suspended U.S. tariffs ahead of trade talks in Washington set for later this week.
Last week, U.S officials said China was warming up to the idea of an enforcement framework. Trump administration argues it is essential to ensure China complies with the eventual terms of the deal.
Boeing (NYSE: BA) and Caterpillar (NYSE: CAT), bellwethers of trade given their large international exposure, ended the day higher and contributed 100 points to the Dow’s 330-point gain.
Beyond trade, energy stocks were buoyed by a surge in U.S. oil prices to a nearly-five-month high. Thanks to strong economic data out of China, the world’s largest energy consumer.
But defensive stocks proved an exception to the rally, with real estate, consumer staples and utilities shares ending in the red.
