Trade hopes lift Wall St.; China tempers optimism

WALL STREET rose on Wednesday on hopes of progress in USChina trade talks, though stocks pared gains late after Chinese officials said Beijing had lowered expectations for negotiations this week.

All three major US stock averages closed in the black, but lost ground as the closing bell approached after Chinese officials said goodwill was damaged by the US Commerce department’s blacklisting of 28 Chinese companies this week.

Investor sentiment got an early boost following a Bloomberg report that China remained open to agreeing to a partial trade deal with the US.

Separately, the Financial Times said Beijing was offering to increase its annual purchases of US agricultural products.

“A partial deal with China would at least pave the way for a larger deal down the road,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “Every day we get a different tweet and the market takes a different direction. Today is an up day on a favorable tweet.”

Minutes from the US Federal Reserve’s September meeting showed most policy makers supported last month’s interest rate cut, and while all were generally more concerned with risks associated with the US-China trade war and slowing global growth among other geopolitical issues, they differed on what that meant for the US economy.

“There was some dissent in the vote, but everyone’s together on the concept of monetary policy setting being data dependent,” said Joseph Sroka, chief investment officer at NovaPoint in Atlanta. “And recent data, particularly from the manufacturing sector, would continue to imply there’s a good probability of a rate reduction at the October meeting.”

Trade tensions, signs of slowing economic growth and rising geopolitical tensions have gripped equity markets so far this month, with the S&P 500 and Dow Jones indexes off about two percent since the end of September.

The Dow Jones Industrial Average rose 181.97 points or 0.7% to 26,346.01; the S&P 500 gained 26.34 points or 0.91% to 2,919.40; and the Nasdaq Composite added 79.96 points or 1.02% to 7,903.74.

All 11 major sectors of the S&P 500 closed higher, with technology and energy enjoying the largest percentage gains.

Trade-sensitive chipmakers rose, with the Philadelphia SE Semiconductor index rising 1.7%.

Microsoft led the Dow’s gain, advancing 1.9%, while Johnson & Johnson was the blue-chip index’s sole decliner.

The drug maker’s shares dropped 2.0% after a jury awarded $8 billion in punitive damages in a case surrounding its antipsychotic drug Risperdal.

With third-quarter earnings season coming into focus, analysts now expect earnings for S&P 500 companies to drop by 3.1% year on year, the first contraction since the earnings recession that ended in 2016.

Advancing issues outnumbered declining ones on the NYSE by a 1.95 to 1; on Nasdaq, a 1.60-to-1 ratio favored advancers. —