U.S. Stocks Surge After China Revives Trade-Talk Hopes

The Dow and broader U.S. stock market surged on Thursday after China’s Commerce Ministry said it was prioritizing discussions with the Trump administration to end the tariff war.

Dow, S&P 500, Nasdaq Jump

All of Wall Street’s major indexes finished sharply higher, with the Dow Jones Industrial Average climbing 326.15 points, or 1.3%, to 26,362.25. Caterpillar Inc. (NCAT) and Home Depot Inc. (HD) were the biggest gainers.

Dow Jones Industrial Average rallies on trade hopes. | Source: The Wall Street Journal.

The broad S&P 500 Index of large-cap stocks rallied 1.3% to 2,924.58, with ten of 11 sectors reporting gains. Information technology, the S&P 500’s largest component, led the advance.

Surging technology shares propelled the Nasdaq Composite to gains of 1.5%, closing at 7,973.39.

The CBOE Volatility Index, commonly known as the VIX, swung sharply lower on Thursday. VIX fell by as much as 9%, reaching a low of 17.60 on a scale of 1-100 where anything below 20 signals complacency in the stock market.

U.S.-China Trade Talks to Resume

The United States and China have held talks to revive face-to-face trade negotiations as soon as September, fueling hopes that the two superpowers were looking to resolve their yearlong spat.

As Reuters reports, China’s Ministry of Commerce has prioritized trade talks and believes progress can be made if Washington can create favorable conditions for further dialogue.

Less than a week ago, China announced retaliatory tariffs on $75 billion worth of U.S. goods, prompting the Trump administration to threaten an additional 5% duty on $550 billion worth of Chinese imports. President Trump unleashed a tweetstorm urging American businesses to look for “an alternative to China.”

The trade battle has undermined global growth and wreaked havoc on producers in both countries. The U.S. manufacturing sector appears to be recession-bound, according to latest PMI data, while China’s industrial production is currently at 17-year lows.

Economic Data in Line with Expectations

U.S. gross domestic product (GDP) expanded 2% annually in the second quarter, down slightly from an initial estimate of 2.1%, the Commerce Department reported Thursday. The downward revision was in line with forecasts and reflected weaker conditions in exports, housing and inventory investment.

The U.S. economy is on track to expand at a slightly faster 2.3% pace in the third quarter, according to the Atlanta Fed’s latest GDP tracker. At the start of the week, the tracker was forecasting growth of 2.2%.

Washington’s goods trade deficit with the rest of the world narrowed to $72.34 billion in July from $74.16 billion the previous month.

Meanwhile, initial jobless claims for the week ended August 24 increased slightly to 215,000 from 211,000 the week before, Labor Department data showed. The claims numbers were in line with forecasts.

Featured image courtesy of Shutterstock. Chart via The Wall Street Journal.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi