S&P 500 near record high after US, China trade deal; banks disappoint

Wall Street’s S&P 500 benchmark rose to trade near an all-time high on Wednesday after the United States and China signed a Phase 1 trade agreement and pledged to resolve their longstanding tariff dispute that has roiled¬†financial markets.

The centrepiece of the deal is a pledge by China to purchase at least an additional $US200 billion ($289 billion) worth of US farm products and other goods and services over two years, over a baseline of $US186 billion in purchases in 2017.

With the trade deal out of the way, investors' focus was on company earnings.
With the trade deal out of the way, investors’ focus was on company earnings.Credit:AP

However, the signing of the deal drew lukewarm response from the stock market.

“We had a historic signing but there is nothing in there that was fresh so I think the theme is going to be earnings,” said Andre Bakhos, managing director at New Vines Capital in New Jersey.

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President Donald Trump said he would remove all US tariffs on Chinese imports as soon as the two countries complete the Phase 2 trade agreement, on which negotiations will start soon.

At 1:35 pm New York Time (5:35am AEST), the Dow Jones Industrial Average was up 112.69 points, or 0.39 per cent, at 29,052.36, the S&P 500 was up 6.16 points, or 0.19 per cent, at 3,289.31 and the Nasdaq Composite was up 17.37 points, or 0.19 per cent, at 9,268.70.

Wall Street indexes came off their record highs hit earlier in the session, with disappointing earnings updates from Bank of America and Goldman Sachs weighing on the S&P 500 banking sector which fell 2.1 per cent.

Bank of America Corp reported a better-than-expected quarterly profit, but warned of weak net interest income in the first half of 2020, knocking its shares 2 per cent.

Goldman Sachs edged up 0.4 per cent despite reporting a bigger-than-expected fall in profit as it set aside more money to cover legal costs.

In other earnings-related news, UnitedHealth Group, the largest US health insurer, rose 3.2 per cent as it affirmed its full-year outlook for 2020 adjusted earnings. The healthcare sector, up 0.8 per cent, was a top gainer among the 11 S&P subsectors.

Retailer Target slumped 7.6 per cent after it missed its own expectations for 2019 holiday season sales after reporting a drop in online growth and demand for toys and electronics.

Toymakers Mattel and Hasbro fell 4.4 per cent and 2.6 per cent, respectively, while electronics seller Best Buy dropped 1.1 per cent.

Advancing issues outnumbered decliners by a 1.35-to-1 ratio on the NYSE and a 1.40-to-1 ratio on the Nasdaq.

The S&P index recorded 72 new 52-week highs and no new lows, while the Nasdaq recorded 137 new highs and 13 new lows.

Reuters

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Source: Thanks smh.com