Wall Street higher but off intraday records as China and US ink trade truce

Traders work on the floor at the New York Stock Exchange. The three main stock indexes gave up early record highs, with disappointing earnings reports from Bank of America pushing the S&P financial index down 0.6 per cent. — Reuters pic
Traders work on the floor at the New York Stock Exchange. The three main stock indexes gave up early record highs, with disappointing earnings reports from Bank of America pushing the S&P financial index down 0.6 per cent. — Reuters pic

NEW YORK, Jan 16 ― US stocks climbed but were off earlier intraday records yesterday after the United States and China signed a Phase 1 trade agreement and pledged to resolve a tariff dispute that has roiled financial markets for over a year.

The centrepiece of the truce is a pledge by China to purchase at least an additional US$200 billion (RM813 billion) worth of US farm products and other goods and services over two years, over a baseline of US$186 billion in purchases in 2017.

The trade agreement clears the way for investors to focus on upcoming quarterly earnings reports, including the outlooks companies provide in light of the deal.

“There's no question from a psychological viewpoint it's a big relief for the market,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “There are still CEOs that are dubious, but this might help capital investments, and that was the biggest missing link to the economy over the last few years.”

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.

The three main stock indexes gave up early record highs, with disappointing earnings reports from Bank of America pushing the S&P financial index down 0.6 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 down 2.1 per cent.

Goldman Sachs Group Inc added 0.5 per cent despite reporting a bigger-than-expected fall in profit as it set aside more money to cover legal costs.

At 2.27pm ET, the Dow Jones Industrial Average was up 0.54 per cent at 29,095.54 points, while the S&P 500 gained 0.33 per cent to 3,293.84.

The Nasdaq Composite added 0.32 per cent to 9,280.96.

UnitedHealth Group Inc, the largest US health insurer, rose 3.5 per cent as it affirmed its full-year outlook for 2020 adjusted earnings. The S&P healthcare index climbed 1.0 per cent.

Retailer Target Corp slumped 7.3 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 Inc and Hasbro Inc fell 4.8 per cent and 2.6 per cent, respectively, while electronics seller Best Buy dropped 1.4 per cent.

Advancing issues outnumbered declining ones on the NYSE by a 1.46-to-1 ratio; on Nasdaq, a 1.51-to-1 ratio favoured advancers.

The S&P 500 posted 72 new 52-week highs and no new lows; the Nasdaq Composite recorded 143 new highs and 15 new lows. ― Reuters

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