Wall Street rallies on trade optimism, hopes of avoiding government shutdown
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(Reuters) – Wall Street’s main indexes extended gains on Tuesday, in a broad-based rally after American lawmakers reached a tentative deal to avoid another partial government shutdown and on hopes of an agreement during the ongoing U.S.-China trade talks.
A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., February 8, 2019. REUTERS/Brendan McDermid
President Donald Trump comments that he did not anticipate another government shutdown added to sentiment, even though he expressed unhappiness about the agreement that includes funds for U.S.-Mexican border security but not for his promised wall.
The S&P 500 index crossed its 200-day moving average price on Tuesday, a technical level that indicates long-term momentum, for the first time since Dec. 4.
The benchmark index is now just about 7 percent away from its Sept. 20 record closing high, boosted by an upbeat fourth-quarter earnings season, a dovish Federal Reserve and trade optimism.
“The fact that lawmakers want to leave the government open sounds like one of the biggest drivers for markets today,” said Gary Bradshaw, portfolio manager with Hodges Funds in Dallas.
“Investors like that fact that we are getting closer to trade issues improving. They are taking a risk-on stance, everyone is buying today.”
Top U.S. officials arrived in the Chinese capital on Tuesday for high-level trade talks as the world’s two largest economies attempt to strike a deal before a March 1 deadline and avoid another escalation of tariffs.
Trump said he would consider pushing the deadline if the two sides were close to a deal.
Trade-sensitive industrials climbed 1.52 percent, boosted by Boeing Inc and Caterpillar Inc.
Chipmakers, which depend on China for a huge chunk of their revenue, also rose and pushed the Philadelphia chip index 1.92 percent higher.
The broader technology sector rose 1.28 percent, lifted by gains in Apple Inc, Microsoft Corp and Intel Corp.
Amazon.com Inc rose 2.24 percent and was the biggest boost to the S&P 500 and Nasdaq.
In the latest data underscoring the economy’s strength, U.S. job openings surged to a record high in December.
At 12:41 p.m. ET, the Dow Jones Industrial Average was up 337.49 points, or 1.35 percent, at 25,390.60. The S&P 500 was up 32.98 points, or 1.22 percent, at 2,742.78 and the Nasdaq Composite was up 96.36 points, or 1.32 percent, at 7,404.27.
Eight of the 10 major sectors trading higher posted gains of more than 1 percent. Only the real estate sector was trading lower.
About 71 percent of the S&P companies that have posted earnings have topped expectations, according to IBES data from Refinitiv. But analysts’ estimates for first-quarter earnings have turned negative for the first time since 2016.
Electronic Arts Inc jumped 4.3 percent after the videogame maker’s newly launched battle royale game gained traction. Rival Take-Two lost 4.2 percent following a downgrade by a 5-star analyst.
Advancing issues outnumbered decliners by a 3.34-to-1 ratio on the NYSE and by a 3-to-1 ratio on the Nasdaq.
The S&P index recorded 39 new 52-week highs and one new low, while the Nasdaq recorded 61 new highs and nine new lows.
Reporting by Amy Caren Daniel and Shreyashi Sanyal in Bengaluru; Editing by Sriraj Kalluvila