Wall Street gains on U.S.-China trade optimism; Trump declares emergency

(Reuters) – Wall Street’s main indexes were set on Friday to post their biggest weekly gain in nearly a month, as investors were optimistic about the ongoing trade talks to resolve a bruising tariff dispute between the United States and China.

President Donald Trump said talks with China “are going extremely well”, and the U.S. is closer than ever to having a “real” trade deal with Beijing. Discussions between the world’s largest economies will continue next week in Washington.

“Today’s sentiment is mainly based on trade progress and the fact that we will see Chinese representatives in D.C., it seems like the talks are going to deliver results sooner-than-expected,” said Edward Moya, market analyst at forex brokerage Oanda in New York.

Hopes of a trade deal ahead of a March 1 deadline has helped the trade-sensitive industrials gain nearly 17 percent so far this year, making it the best performing S&P sector.

The group rose 1.13 percent boosted by bellwethers Boeing Co and Caterpillar Inc.

The markets shrugged off Trump declaring a national emergency in a bid to fund his promised wall at the U.S.-Mexico border without congressional approval, an action Democrats vowed to challenge as a violation of the U.S. Constitution.

“Right now the implications of the emergency is being overlooked, because of the legal battle,” Moya said.

Despite the threat of a national emergency, all 11 major S&P sectors were trading higher with financials up 1.89 percent, leading the gains.

The banking sector rose 2.62 percent boosted by big U.S. lenders. JPMorgan Chase & Co, Bank of America Corp and Wells Fargo & Co rose between 1.7 percent and 3.0 percent after Warren Buffett’s Berkshire Hathaway Inc increased its stake in the companies.

At 12:55 p.m. ET the Dow Jones Industrial Average was up 345.97 points, or 1.36 percent, at 25,785.36. The S&P 500 was up 22.52 points, or 0.82 percent, at 2,768.25 and the Nasdaq Composite was up 28.54 points, or 0.38 percent, at 7,455.49.

The S&P has rallied more than 10 percent so far this year, driven by progress on trade, a dovish Federal Reserve and a largely upbeat fourth-quarter earnings reports. The benchmark index is now set to end above its 200-day moving average, a proxy for long-term momentum, for a fourth straight session.

In the last leg of earnings, analysts now see profit growth of 16.2 percent for the quarter, according to IBES data from Refinitiv. However, first-quarter estimates are less favorable, showing a 0.5 percent year-on-year decline.

PepsiCo Inc rose 3.1 percent after the soda maker said increased investments in advertising and products will boost sales growth.

Nvidia Corp rose 2.5 percent and helped push the technology sector 0.42 percent higher, after the chipmaker forecast a demand rebound by the end of the year.

Newell Brands Inc plunged 20.4 percent after it forecast lower-than-expected full-year sales due to a strong dollar.

Advancing issues outnumbered decliners for a 3.55-to-1 ratio on the NYSE and a 3.31-to-1 ratio on the Nasdaq.

The S&P index recorded 40 new 52-week highs and no new low, while the Nasdaq recorded 73 new highs and 15 new lows.

Reuters

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Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya