Dow rises 160 points, hits record as Wall Street awaits signing of US-China phase one trade deal

Stocks rose on Wednesday ahead of the U.S. and China signing a so-called phase one trade deal while the corporate earnings season picked up steam.

The Dow Jones Industrial Average traded 160 points higher, or 0.6% to reach an all-time high. The S&P 500 gained 0.4% and also hit a record, while the Nasdaq Composite advanced 0.5%.

Also helping sentiment Wednesday morning were comments from White House economic advisor Larry Kudlow, who said the Trump administration would unveil more tax cuts later this year.

President Donald Trump is expected to sign the deal at around 11:30 a.m. ET. Investors have been eagerly awaiting the signing of the so-called phase one trade agreement as the conflict between the world’s largest economies has dragged on for nearly two years.

However, Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer said in a joint statement Tuesday that existing U.S. tariffs on Chinese goods would stay in place even after the deal was signed.

There’s also concern over the details of the phase one agreement. A U.S. Trade Representative document said the deal includes a “dramatic expansion of U.S. food, agriculture and seafood product exports.” The USTR has also said China will buy at least $200 billion in U.S. products over a two-year period.

Wall Street also kept an eye on Corporate America as the earnings season. Bank of America reported quarterly results that beat analyst expectations as bond-trading revenue ripped higher.

Goldman Sachs posted a revenue for the quarter that surpassed estimates. BlackRock, UnitedHealth and PNC Financial also posted quarterly earnings that beat analyst expectations.

So far, about 30 S&P 500 companies have released their quarterly numbers. Of those companies, 82% have posted better-than-expected profits, according to FactSet data.

Expectations for corporate profits were downbeat heading into the reporting period. FactSet estimated S&P 500 earnings to have fallen 2% in the fourth quarter on a year-over-year basis.

But Mark Haefele, global chief investment officer at UBS GWM, has a more upbeat outlook on the earnings season.

“We see the upcoming reporting season marking a turning point after a period of weak profit growth for US companies, one that should push equities higher this year even though the potential for further multiple expansion is modest in our view,” he said in a note. “So we have modestly increased our forecast for US EPS growth to 6% this year.”

In other corporate news, Target shares dropped more than 6% after the retailer announced disappointing holiday same-store sales. Target said its same-store sales during the holidays rose just 1.4%, compared to growth of 5.7% from the prior year.


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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, 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 CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya