Wall Street touches record high as Trump tweet fuels trade optimism
US stocks hit record highs on Thursday after President Donald Trump tweeted that Washington was “very close” to a trade deal with Beijing and The Wall Street Journal reported that US trade negotiators had offered to cancel a new round of tariffs on Chinese goods.
The three main indexes opened lower but quickly gained ground after Trump’s statement, which comes just days before the tariffs kick in on December 15.
The Journal reported that US negotiators have offered to slash existing levies by as much as half on roughly $US360 billion ($522 billion) of Chinese-made goods, supporting the rise.
“What Trump is saying and what China is responding to would suggest that maybe we are more at a status quo level of a detente than at further deterioration in relationships,” said Willie Delwiche, investment strategist at Baird in Milwaukee, Wisconsin.
“We want to see evidence that things aren’t deteriorating and if tariffs are getting delayed or rolled back, that’s evidence.”
The record run in US stocks recently has been buoyed by three interest rate cuts this year, a calmer tone on trade and better-than-feared corporate earnings. The S&P 500 index is now up 26 per cent so far in 2019.
However, investors are particularly sensitive about potential end-of-year weakness after the final month of 2018 was the worst December on Wall Street since the Great Depression.
“We’re backing off the highs of the day just on the recognition that Trump has been crying wolf for 18 months now,” said Robert Phipps, director at Per Stirling Capital Management in Austin, Texas.
The Federal Reserve kept interest rates steady on Wednesday and pointed to a “favourable” economic outlook next year.
Only defensive stocks such as real estate, utilities and consumer staples were trading lower, suggesting heightened risk appetite among investors.
The Dow Jones Industrial Average was up 132.35 points, or 0.47 per cent, at 28,043.65, the S&P 500 was up 17.81 points, or 0.57 per cent, at 3,159.44 and the Nasdaq Composite was up 35.80 points, or 0.41 per cent, at 8,689.85.
Shares of Delta Air Lines Inc rose 3.3 per cent as the carrier forecast a rise in profit and revenue in 2020.
Advancing shares outnumbered decliners by a 1.69-to-1 ratio on the NYSE and by a 1.77-to-1 ratio on the Nasdaq.
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