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US Stocks: US Indexes Finish Trade Higher

US STOCKS—Wall Street indexes finished the trade session higher after US President Donald Trump announced a delay in the planned tariffs on Chinese imports. Shares from the Basic Materials, Technology, and Industrials sectors led the gains in the US stocks.

The Dow Jones Industrial Average gained 0.23 percent, reaching a new 3-month high.  The S&P 500 rose 0.12 percent, while the NASDAQ Composite index jumped 0.36 percent.

Trump’s announcement regarding the tariff deadline is considered to be a sign that Beijing and Washington are nearing a deal that would end their months-long trade war, which has dampened global growth.

However, the gains were still limited after consecutive weeks of rallies for US stocks’ three main indexes. This was in part because of the trade optimism and dovish signals from the Federal Reserve.

“A lot of the good news related to trade is priced in at this point,” said a New York-based analyst. “There’s only so much we can rally when somebody says we’re making progress… the trade stuff is a little bit of a sideshow. If you get back looking at economic growth, it’s clearly slowing.”

Fed Chairman Jerome Powell is set to testify before a US Senate later in the day, with investors anticipating more “patience” cues from the Fed.

“In the short term, trade got taken off the table today so next up on the calendar is Powell speaking to Congress. It’s possible investors are starting to clam up a bit because of what they think Powell may say,” said a San Francisco-based portfolio manager.

Figures and Numbers

US Stocks: The gains were capped due to a number of factors, including weakening earnings estimates.
Wall Street indexes benefited from Trump’s decision to delay scheduled tariffs on Chinese imports for extended negotiations on US-China trade deal.

The Dow gained 60.14 points to 26,091.95, while the S&P fetched 3.44 points to 2,796.11. The NASDAQ Composite climbed 26.92 points to 7,554.46.

Meanwhile, weakening estimates of current earnings are also source of caution for investors. General consensus suggests that a 0.9 percent decline in the S&P Q1 earning will be seen, compared with the expectations for 5.3 percent growth on January 1, according to data.

“It’s hard to get valuations to continue to rise in the face of falling earnings estimates,” said a Boston-based global investment strategist.

Seven out of 11 major sectors in the S&P finished the trade with gains, while the S&P technology index increased 0.5 percent. The Philadelphia semiconductor index rose 0.8 percent as chip companies are exposed to China.

Further, news about M&A activities also fueled investors’ appetite for risks.

The NASDAQ Biotechnology index climbed 2 percent, thanks to Spark Therapeutics Inc., which its shares catapult 120 percent after reports that it was being bought by  Swiss drugmaker Roche Holding AG for $4.3 billion.

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