Markets

U.S. Stocks Regain Ground On Renewed Optimism About Trade Deal

(RTTNews) - After showing a notable move to the downside over the past few sessions, stocks regained some ground during trading on Wednesday. The major averages climbed firmly into positive territory but remained well off the record highs.

The major averages gave back ground going into the close but held on to notable gains. The Dow climbed 146.97 points or 0.5 percent to 27,649.78, the Nasdaq rose 46.03 points or 0.5 percent to 8,566.67 and the S&P 500 advanced 19.56 points or 0.6 percent to 3,112.76.

The rebound on Wall Street came after a report from Bloomberg News indicated the U.S. and China are moving closer to agreeing on the amount of tariffs that would be rolled back in a phase one trade deal.

Citing people familiar with the talks, Bloomberg said U.S. negotiators expect a phase one deal to be completed before U.S. tariffs are set to rise on December 15.

The people told Bloomberg outstanding issues in the talks include how to guarantee China's purchases of U.S. agricultural goods and exactly which tariffs to roll back.

Bloomberg said the people downplayed President Donald Trump's recent remarks suggesting he would like to delay completing an agreement until after the 2020 elections, noting the president was speaking off the cuff.

Renewed optimism about a potential trade deal helped offset negative sentiment generated by some disappointing economic data, including a report from payroll processor ADP showing much weaker than expected private sector job growth in the month of November.

ADP said private sector employment rose by 67,000 jobs in November after climbing by a revised 121,000 jobs in October.

Economists had expected employment to jump by 140,000 jobs compared to the addition of 125,000 jobs originally reported for the previous month.

"The job market is losing its shine," said Mark Zandi, chief economist of Moody's Analytics. "Job openings are declining and if job growth slows any further unemployment will increase."

On Friday, the Labor Department is scheduled to release its more closely watched monthly jobs report, which includes both public and private sector jobs.

Economists expect employment to increase by 180,000 jobs in November after climbing by 128,000 jobs in October, while the unemployment rate is expected to hold at 3.6 percent.

A separate report released by the Institute for Supply Management showed the pace of growth in U.S. service sector activity slowed by more than anticipated in the month of November.

The ISM said its non-manufacturing index dipped to 53.9 in November after climbing to 54.7 in October. While a reading above 50 still indicates service sector growth, economists had expected the index to edge down to 54.5.

Sector News

Energy stocks helped lead the markets higher, benefiting from a sharp increase by the price of crude oil. Crude for January delivery spiked $2.33 or 4.2 percent to $58.43 a barrel.

The jump in oil prices came after a report from the Energy Information Administration showed a steeper than expected weekly drop in crude oil inventories. Traders were also looking ahead to the start of OPEC's biannual meeting in Vienna on Thursday.

Reflecting the strength in the energy sector, the NYSE Arca Natural Gas Index and the Philadelphia Oil Service Index surged up by 3.6 percent and 3.5 percent, respectively. The NYSE Arca Oil Index also jumped by 1.6 percent.

Significant strength was also visible among semiconductor stocks, as reflected by the 1.6 percent gain posted by the Philadelphia Semiconductor Index.

Microchip Technology (MCHP) posted a standout gain after the chipmaker raised its fiscal third quarter guidance due to strong bookings.

Steel, banking and biotechnology stocks also saw notable strength, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index slumped by 1.1 percent, while Hong Kong's Hang Seng Index plunged by 1.3 percent.

Meanwhile, European stocks moved mostly higher on the day. While the U.K.'s FTSE 100 Index rose by 0.4 percent. The German DAX Index and the French CAC 40 Index jumped by 1.2 percent and 1.3 percent, respectively.

In the bond market, treasuries gave back ground following the rally seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, advanced 7.2 basis points to 1.781 percent.

Looking Ahead

Reports on weekly jobless claims, the U.S. trade deficit and factory orders may attract some attention on Thursday, although trading activity is likely to be relatively subdued ahead of the release of the monthly jobs report on Friday.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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