NEW YORK, Aug 16 — US stocks muscled higher at the open today as investors found relief in hope for progress in the US-China trade war, and housing data offered enough good news not to ruin the party. After a wild week in which the Dow posted its worst day of the year, news that President Donald Trump has a phone call scheduled soon with Chinese leader Xi Jinping prompted a rebound.
About 10 minutes into the final trading day of the week, the Dow Jones Industrial Average gained 0.8 per cent to 25,778.54.
The broad-based S&P 500 jumped 0.9 per cent to 2,847.66, and the tech-rich Nasdaq Composite Index advanced one per cent to 7,846.92.
Trump revealed news of the planned call in comments on his desire to see Hong Kong protests resolved, but investors see any contact as signs the trade frictions could be resolved.
Trump also said trade negotiations set for September are “still on”, offering more signs of hope that a deal could be reached. Any agreement is likely to remove a key source of turmoil that has fuelled growing concerns about a possible recession on the horizon.
Farm machinery manufacturer Deere surged more than three per cent despite reporting disappointing earnings, due to uncertainty amid the trade war that has hit US farmers hard.
Industrial titan General Electric rebounded nearly six per cent after CEO Larry Culp bought nearly US$2 million (RM8.36 million) in shares, boosting investor confidence after whistleblower Harry Markopolos accused the company of massive accounting fraud — a charge the company vehemently denied.
Government housing data was mixed but had enough positive signs of a coming recovery in home construction to not derail the rise in stocks.
But the rollercoaster week shows any new comment or event could send investors heading for the exits, especially with a key recession warning light flashing red.
“The behaviour of the Treasury market, then, promises to be a focal point throughout today’s session, just as it was in Thursday’s session,” said Patrick J. O’Hare of Briefing.com.
The yield on the 30-year Treasury bond hit an all-time low yesterday, falling below two per cent for the first time, but peeked just above that level early today, back above shorter-term yields.
Tumbling longer-term yields are seen as a reliable indicator of a recession on the horizon as investors flood into safe havens. — AFP
