Optimism over U.S.-China trade talks boosts stocks again
Stocks finished broadly higher Wednesday as investors remained optimistic that the U.S. and China will make more progress in resolving their costly trade dispute.
Energy companies, retailers and industrial stocks accounted for much of the broad gains as the market extended its winning streak to a fourth day.
Key officials from the world’s two largest economies will meet Thursday and Friday to try and stave off an escalation of a trade conflict that has hurt companies and consumers by raising prices on a number of products. President Donald Trump has said he might let a March 2 deadline slide if the U.S. and China get close to 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 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 smaller-company 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, the White House’s remarks about the trade talks this week have helped alleviate some uncertainty for the market.
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.
The sweeping tax law passed by the GOP-led Congress in late 2017 gave companies an incentive to boost their stock prices.
U.S. benchmark crude rose 1.5 percent to settle at $53.90 a barrel in New York. Brent crude, the standard for international oil prices, gained 1.9 percent to close at $63.61 a barrel in London.
The pickup in oil prices gave a boost to energy stocks. Exxon Mobil rose 1.1 percent.
Bond prices fell. The yield on the 10-year Treasury rose to 2.70 percent from 2.68 percent late Tuesday.
In other energy futures trading, wholesale gasoline added 2.7 percent to $1.47 a gallon. Heating oil climbed 1.7 percent to $1.94 a gallon. Natural gas dropped 4.2 percent to $2.58 per 1,000 cubic feet.