U.S. Stocks Flip Green as Global Trade Uncertainty Lingers
The Dow and broader U.S. stock market advanced on Wednesday following a mixed session overseas, as concerns about global trade and economic growth continued to weigh.
Dow, S&P 500, Nasdaq Rally
All of Wall Street’s major indexes pushed higher, overcoming a muted pre-market for Dow futures. The Dow Jones Industrial Average jumped 258.20 points, or 1%, to 26,036.10.
The broad S&P 500 Index of large-cap stocks rose 0.7% to 2,887.94. Most of the primary sectors contributed to the gains, with energy leading the pack. Industrials, materials and consumer discretionary stocks also outperformed the benchmark average.
The technology-driven Nasdaq Composite Index advanced 0.4% to close at 7,856.88.
U.S.-China Trade War Heats Up
Global equity markets were mixed in Wednesday trading, as investors looked ahead to planned tariff increases by the United States and China. Both countries will implement their first tariff hikes at the start of September, escalating a trade war that is now entering its second year.
China announced its new tariff policy last Friday, prompting U.S. President Donald Trump to respond with threats of his own. The president has not only vowed to return the favor, but even urged American businesses to stop doing business in China.
Manufacturing in both countries has taken a severe hit since the trade war began. If PMI data are to be believed, U.S. manufacturing contracted this month for the first time in nearly a decade. Meanwhile, China’s rate of industrial-production growth weakened in July to its slowest in 15 years.
Japan-Korea Trade Tensions
Trade uncertainty isn’t just limited to China and the United States. Tensions between Japan and South Korea – two of Asia’s largest economies – reached a high point Wednesday after Tokyo removed its neighbor from a so-called white list. In practice, this means Japanese exports to South Korea must undergo additional screening to ensure they are not used for weapons.
“This is not a trade ban,” Japan’s chief cabinet secretary Yoshihide Suga said last week.
South Korean officials criticized the move as “reckless” and tantamount to “economic war.”
“If Japan — even though it has great economic strength — attempts to harm our economy, the Korean Government also has countermeasures with which to respond,” President Moon Jae-in said Friday, according to CNN.
Featured image courtesy of Shutterstock. Chart via The Wall Street Journal.