U.S.-China Trade Optimism Propels Stocks to Two-Month Highs
Stocks extended their rally Wednesday after President Trump said he may let a trade-deal deadline with China “slide” if the two sides were making enough progress on a comprehensive agreement. People familiar with the president’s plans also said he is likely to sign a new budget deal before Friday that would avoid another government shutdown.
Dow, S&P 500 and Nasdaq Reach Two-Month Highs
All of Wall Street’s major benchmarks finished higher. The Dow Jones Industrial Average rose 117.51 points, or 0.5%, to 25,543.27. 3M Co (MMM) and Home Depot Inc. (HD) were the index’s top performers.
The broad S&P 500 Index climbed 0.3% to 2,753.03, with energy leading nine of 11 primary sectors higher. The S&P 500’s energy index rose 1.2% after Saudi Arabia’s oil minister announced plans to curb production levels by an additional 500,000 barrels per day next month.
Other sectors to outperform the market included industrials, consumer discretionary and real estate. Each S&P 500 component rose by at least 0.6%.
The technology-focused Nasdaq Composite Index gave back most of its gains to finish up 0.1% at 7,420.38.
U.S.-China Trade Talks Continue
Bilateral trade talks between the United States and China are expected to continue on Thursday following three days of high-level negotiations. While there were no major headlines from the first three days of talks, President Trump has said he would be open to letting the Mar. 1 trade-deal deadline “slide.” That’s when a 90-day truce between both countries was supposed to expire.
Chinese President Xi Jinping is expected to meet members of the U.S. trade delegation in Beijing on Friday. No meeting between Xi and Trump is planned before the Mar. 1 trade-deal deadline.
China offered up major concessions during the previous round of trade negotiations. This included a plan to completely eliminate its $323billion surplus with Washington in roughly six years’ time. The plan included the purchase of an additional $1 trillion in U.S. goods through 2024. Read more: Bye Bye Trade War? China Plans $1 Trillion Buying Spree to Reduce US Trade Deficit.
Government Shutdown Unlikely
President Trump said Tuesday that a second government shutdown was unlikely despite his unhappiness about a new border-security deal that includes only a fraction of the $5.7 billion he requested. Democrats and Republicans agreed late Monday on a deal that allocates $1.38 billion for 55 miles of physical barriers.
Trump said the bill was “not doing the trick” and that he planned to negotiate an amendment, according to The Wall Street Journal. Meanwhile, Senate Majority Leader Mitch McConnell called it a “pretty good deal.”
The current stopgap funding agreement expires on Friday, which means Congress and the president must agree on a new budget by Saturday to avoid a second partial government shutdown.
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