U.S. Stocks Surge on Budget, Trade Optimism
The U.S. stock market rallied on Tuesday, with the Dow gaining as much as 455 points after lawmakers reached a tentative deal to avoid another costly government shutdown. However, the risk of a second shutdown is still very much in play after President Donald Trump said he may not support the proposed deal.
Big Rally on Wall Street
All of Wall Street’s benchmark indexes finished firmly higher on Tuesday, extending a relief rally that initially began after Christmas. The Dow Jones Industrial Average went up 372.65 points, or 1.5%, to 25,425.76. That was the highest in over two months.
The broader S&P 500 Index gained 1.3% to 2,744.73. Eight of 11 primary sectors rose by at least 1%, with materials stocks gaining more than 2% on average.
Strong gains in technology and communication stocks lifted the Nasdaq Composite Index. The tech-laden average rose 1.5% to 7,414.62.
New Budget Deal? Not So Fast, Says Trump
Markets rallied early Tuesday on reports that congressional leaders had reached a tentative budget deal just in time to avoid another impasse. Investors’ optimism may have been premature since President Trump has yet to endorse the deal. In fact, the president signaled that he may reject the proposal over border-security funding.
“I can’t say I’m happy,” Trump said of the deal in a cabinet meeting on Tuesday. According to The Wall Street Journal, Trump reiterated his promise to build a border wall.
A new budget must be signed by Friday to avoid another partial government shutdown. The existing deal, reached on Jan. 25, extended government funding for three weeks as Congress negotiated a more permanent solution to the budget impasse.
As CCN reported Tuesday, the tentative deal reached by Congress includes increased border-security funding but falls well short of Trump’s request for $5.7 billion. It also proposes to construct additional 55 miles of additional fencing and not the steel barrier Trump’s administration had proposed.
Trump May Extend March Deadline for Tariffs
The United States and China are resuming trade talks this week, though a comprehensive deal before the self-imposed deadline of Mar. 1 seems unlikely. On Tuesday, President Trump said he is willing to extend the deadline for tariffs if both sides reach an agreement soon.
China “very much wants to make a deal,” Trump said, according to CNBC.
Back in December, Trump and China’s Xi Jinping agreed to suspend trade hostilities for 90 days to negotiate a new trade agreement. Over that period, both sides have showed willingness to make concessions on several key areas, with China vowing to eliminate its trade surplus with Washington over a six-year period. Read more: Bye Bye Trade War? China Plans $1 Trillion Buying Spree to Reduce US Trade Deficit.
Trump and Xi are not expected to meet before the self-imposed deadline.
Featured image courtesy of Shutterstock. Chart via Stockcharts.com.