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Stocks Climb on Trade Optimism

By Anna Isaac and Karen Langley 

U.S. stocks rose Wednesday as investors awaited the resumption of U.S.-China trade talks and looked for fresh signals from the Federal Reserve on monetary easing.

The Dow Jones Industrial Average rose 0.6% and the S&P 500 gained 0.8%, a day after the latest spat between the world's two largest economies threatened to undermine the trade negotiations that are set to resume Thursday.

Tensions between the U.S. and China appeared to ratchet up this week as the U.S. imposed export restrictions on more than two dozen Chinese firms, citing their role in abuse of Muslim minorities, and put visa restrictions on Chinese officials.

But market observers Wednesday pointed to optimism on the trade front, as Bloomberg reported that China was open to reaching a partial deal.

"When there's a sense that we're going to get a positive outcome, you see equities rally," said Shawn Cruz, manager of trader strategy at TD Ameritrade. "When there's this sense they're not going to be able to get a deal struck or make progress, then you see equities sell off."

Later Wednesday, investors will listen closely to any fresh signals from Federal Reserve Chairman Jerome Powell in a speech in Kansas City. The Fed will increase its purchases of short-term securities soon in an effort to avoid stress in lending markets, Mr. Powell said Tuesday.

The U.S. central bank will later Wednesday release the minutes from its September meeting, which will likely be scrutinized for any insight into the interest-rate outlook, though economic data and market events since that meeting may have changed policy makers' views.

"What the Fed minutes discuss is likely to be stale information," said Jordan Rochester, foreign exchange strategist at Nomura Bank. "The data has deteriorated since they had their discussion. After the poor manufacturing figures more recently, they softened their tones."

The yield on the 10-year U.S. Treasury note inched up to 1.563%, from 1.532% Tuesday. Yields rise as prices fall.

Among individual companies, Johnson & Johnson shares fell 1.4% after a Philadelphia jury ordered the company to pay $8 billion in damages to a man who said that using antipsychotic drug Risperdal caused enlarged breasts.

In Japan, the benchmark Nikkei 225 index slipped 0.6% as data on machine-tool orders confirmed a bleak picture for the country's manufacturing sector. Hong Kong's Hang Seng dropped 0.8% amid tensions over protests in the city.

Write to Anna Isaac at anna.isaac@wsj.com

 

(END) Dow Jones Newswires

October 09, 2019 10:55 ET (14:55 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.