Optimism over trade talks boosts stocks
Stocks ended broadly higher Wednesday as investors remained optimistic the U.S. and China will make more progress in resolving their trade dispute.
Energy companies, retailers and industrial stocks accounted for much of the gains.
The market extended its winning streak to a fourth day. Key officials from the U.S. and China will meet Thursday and Friday to hold trade talks.
President Donald Trump has said he might let a March 2 deadline slide if the two sides get close to reaching a deal.
After March 2, additional tariffs are scheduled to kick in, making the situation worse. Economists and analysts are optimistic that both sides will eventually hammer out an agreement that satisfies U.S. complaints that China steals or pressures U.S. companies to hand over technology.
“The president’s seemingly positive tone regarding trade has helped underpin the market, particularly the industrial names,” said Quincy Krosby, chief market strategist at Prudential Financial. “That’s a positive catalyst for the market.”
The S&P 500 index gained 8.30 points, or 0.3 percent, to 2,753.03. The Dow Jones Industrial Average climbed 117.51 points, or 0.5 percent, to 25,543.27. The Nasdaq composite added 5.76 points, or 0.1 percent, to 7,420.38. The Russell 2000 index of smallercompany stocks, which has been leading the other indexes this year, added 4.71 points, or 0.3 percent, to 1,542.94.
Major indexes in Europe also finished broadly higher, despite a report of slumping industrial output across the 19 countries that use the euro.
Companies on both sides of the U.S.-China dispute have been battered by Washington’s tariffs and retaliatory duties imposed by Beijing. The stakes are rising as global economic growth cools, which has contributed to a dimmer outlook for company earnings this year.
Still, White House remarks about the trade talks this week have helped alleviate some uncertainty for the market.
“The momentum that we saw yesterday has certainly carried through today,” said Erik Davidson, chief investment officer at Wells Fargo Private Bank.
The market briefly lost some of that momentum around midmorning Wednesday as U.S. Sen. Marco Rubio announced over Twitter plans to introduce a bill aimed at deterring companies from buying back their own stock. The Republican from Florida said the argument that stock buybacks free up money for companies to reinvest in growth “isn’t backed up by the facts.”
Rubio’s remarks come as corporate stock buybacks hit new highs last year, led by technology companies.
Buybacks, in which companies purchase their own shares and retire them, are popular with investors because fewer shares outstanding lifts earnings per share, the most watched barometer of corporate success.