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Stocks Climb as Trump Suggests a Trade Deal Is Near

12/12/2019 5:18pm

Dow Jones News


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By Alexander Osipovich and Caitlin Ostroff 

Stocks climbed Thursday after President Trump said on Twitter that the U.S. and China are nearing a trade deal.

Major indexes opened slightly lower but jumped after Mr. Trump tweeted, "Getting VERY close to a BIG DEAL with China. They want it, and so do we!"

The Dow Jones Industrial Average rose 188 points, or 0.7%. The S&P 500 gained 0.7%, while the Nasdaq Composite advanced 0.4%. All three indexes hit intraday records.

The tweet came ahead of a Sunday deadline when a fresh round of tariffs are set to go into effect on roughly $156 billion of Chinese goods.

The Wall Street Journal reported Thursday morning that U.S. negotiators offer to cut existing tariff rates by up to 50% on $360 billion of Chinese imports, citing people familiar with the matter. The negotiators also offered to cancel the new tariffs set to take effect Dec. 15, those people said.

The tariffs, which threaten to deepen China's economic problems and prompt retaliatory action, could weigh on prices of cellphones, laptops and apparel for American consumers.

Investors sold government bonds in favor of riskier assets after Mr. Trump's tweet. The yield on the 10-year U.S. Treasury note rose to 1.894%, from 1.786% on Wednesday. Bond yields move in the opposite direction from prices.

Gold futures slipped 0.2%, while U.S. crude oil futures gained 0.9%.

"We're in a waiting pattern, given the looming trade deadline," said Jeffrey Kleintop, chief global investment strategist at Charles Schwab. "The markets are keying off any indication as to whether we'll get a deal, perhaps more than they should."

The Labor Department said early Thursday that the number of Americans applying for first-time unemployment benefits jumped to the highest level in more than two years. The report contrasted with other recent data showing a strong U.S. jobs market. But initial jobless claims can be volatile, and jitters over the report were quickly dispelled by optimism over trade.

Investors are also closely watching the U.K.'s general election, as voters go to the polls to determine whether Prime Minister Boris Johnson will remain in office.

The FTSE 100 was up 1%, outpacing other European markets, while the pound fell 0.4% against the dollar.

Politicians in both the major political parties are signaling an end to years of constrained fiscal policy as the country prepares to exit from the European Union, and the vote results will play a crucial role in determining the course of Brexit. Although a parliamentary majority for the Conservative Party is seen as most likely, recent polls have shown that Mr. Johnson's lead has narrowed.

Meanwhile, the European Central Bank under its new President Christine Lagarde left interest rates unchanged at minus 0.5%, a day after the U.S. Federal Reserve also held rates steady.

The benchmark Stoxx Europe 600 gained 0.3%. Asian stocks were mixed, with the Hang Seng rising 1.3% and the Shanghai Composite Index falling 0.3%.

Write to Alexander Osipovich at alexander.osipovich@dowjones.com and Caitlin Ostroff at caitlin.ostroff@wsj.com

 

(END) Dow Jones Newswires

December 12, 2019 12:03 ET (17:03 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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