U.S. stocks notch broad gains

The News Herald (Willoughby, OH) - - FRONT PAGE - By Alex Veiga

Stocks notched broad gains as in­vestors re­gained some of their op­ti­mism about the trade war.

Stocks notched broad gains Wed­nes­day on Wall Street as in­vestors re­gained some of their op­ti­mism about the prospects for progress in the trade war be­tween the U.S. and China.

A day af­ter es­ca­lat­ing trade ten­sions led to a sharp sell-off, in­vestors drew en­cour­age­ment from re­ports that Bei­jing sig­naled it is open to a par­tial deal. Wash­ing­ton and Bei­jing are sched­uled to be­gin a 13th round of trade ne­go­ti­a­tions on Thurs­day.

Tech­nol­ogy stocks led the rally, which erased some of the mar­ket’s sharp losses from the day be­fore and snapped a two-day los­ing streak for the S&P 500. The bench­mark in­dex is still on track to end the week with a 1.1% loss.

“Which­ever way the trade winds tend to be blow­ing is the way the mar­ket tends to di­rect it­self,” said Sam Sto­vall, chief in­vest­ment strate­gist, CFRA. “Yes­ter­day it was a worry that we would not re­ally have any kind of suc­cess com­ing out of the up­com­ing trade talks. Now it sounds as if China would be will­ing to en­gage in some piece­meal ac­cords.”

The S&P 500 rose 26.34 points, or 0.9%, to 2,919.40. The Dow Jones In­dus­trial Av­er­age gained 181.97 points, or 0.7%, to 26,346.01. The Nas­daq picked up 79.96 points, or 1%, to 7,903.74. The Rus­sell 2000 in­dex of smaller com­pany stocks added 6.86 points, or 0.5%, to 1,479.46.

Bond yields rose, re­flect­ing the move by in­vestors to shift into higher-risk as­sets. The yield on the 10-year Trea­sury in­creased to 1.58% from 1.53% late Tues­day.

The ma­jor U.S. stock in­dexes re­bounded from the get-go on Wed­nes­day as traders turned more hope­ful about the up­com­ing U.S.-China trade ne­go­ti­a­tions.

Wash­ing­ton and Bei­jing had held off from fur­ther es­ca­lat­ing the con­flict up un­til this week, when the U.S. black­listed a group of Chi­nese tech­nol­ogy com­pa­nies over al­leged hu­man rights vi­o­la­tions. The prospect of China be­ing more open to a par­tial deal on trade helped al­lay in­vestors’ con­cerns Wed­nes­day.

The trade war be­tween the U.S. and China has dragged on for 15 months, in­flict­ing eco­nomic dam­age on both coun­tries. The two sides have raised im­port du­ties on bil­lions of dol­lars of each other’s goods, fu­el­ing fears their dis­pute might tip the global econ­omy into re­ces­sion.

All told, the Trump ad­min­is­tra­tion has im­posed tar­iffs on more than $360 bil­lion worth of Chi­nese goods and plans to tax an ad­di­tional $160 bil­lion of im­ports on Dec. 15. This would ex­tend U.S. tar­iffs to just about ev­ery­thing China ships to the United States. China has coun­ter­punched by tax­ing $120 bil­lion in U.S. ex­ports, no­tably soy­beans and other farm goods.

In­vestors are hop­ing for some type of res­o­lu­tion as the 13th round of trade talks re­sume Thurs­day in Wash­ing­ton.

“Our base case, to which we as­sign a 50% prob­a­bil­ity, is for only mod­est progress in this round of talks,” said Mark Hae­fele, chief in­vest­ment of­fi­cer at UBS Global Wealth Man­age­ment. “Mod­est progress averts fur­ther es­ca­la­tion while fail­ing to re­solve con­flicts over in­tel­lec­tual prop­erty and sub­si­dies.”

The sharp shifts in trade war rhetoric and ac­tions have made for an ex­tremely volatile mar­ket over the last few months. De­spite the gains Wed­nes­day, stocks are still on track for their fourth weekly loss in a row as un­cer­tainty hangs over the mar­kets.

Tech­nol­ogy sec­tor stocks led the gains Wed­nes­day. The sec­tor has been suf­fer­ing most of the week be­cause of un­cer­tainty over the talks. Many of the com­pa­nies rely on China for rev­enue and their sup­ply chains. Mi­crosoft rose 1.9% and Ap­ple added 1.2%.

The health care sec­tor also helped lift the mar­ket, along with en­ergy stocks and com­pa­nies that rely on con­sumer spend­ing. Real es­tate com­pa­nies and util­i­ties lagged the mar­ket in a sign that in­vestors were less in­ter­ested in safe-play sec­tors. John­son & John­son was among the big­gest de­clin­ers in the S&P 500 af­ter the health care com­pany was or­dered to pay $8 bil­lion in puni­tive dam­ages by a Philadelph­ia jury in a case in­volv­ing the an­tipsy­chotic drug Ris­perdal. The stock lost 2.6%.

Next week, com­pa­nies be­gin re­port­ing their re­sults for the third quar­ter. Ex­pec­ta­tions are gen­er­ally low again, with an­a­lysts fore­cast­ing a drop of 4.1% from a year ago. The re­sults, plus what CEOs say about their spend­ing and rev­enue fore­casts, should give a bet­ter pic­ture of the econ­omy’s po­ten­tial di­rec­tion.

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