Stocks notch consecutive gains as Trump plans to meet China’s chief trade negotiator

Stocks notch consecutive gains as Trump plans to meet China’s chief trade negotiator

Investors await news on a possible trade deal Friday

U.S. stocks advanced Thursday for a second straight day after President Donald Trump said he would meet China’s chief trade negotiator at the White House, again raising hopes for progress from two days of talks in Washington in an effort to resolve the two-year-old trade war.

How did the benchmarks perform?

The Dow Jones Industrial Average DJIA, +1.46% rose 150.66 points, or 0.6%, to 26,496.67. The S&P 500 index SPX, +1.51% climbed 0.6%, or 18.73 points, to 2,938.13. The Nasdaq Composite Index COMP, +1.70% picked up 47.04 points, or 0.6%, to finish at 7,950.78.

At session highs, the Dow was up 257.30 points, the S&P 500 had risen 28.98 points and the Nasdaq had gained 79.1 points, all of which amounted to advances of about 1%.

Despite two days of gains, the Dow has lost 0.3% week-to-date, while the S&P 500 and Nasdaq are on pace to post 0.5% and 0.4% weekly losses, respectively.

What drove the stock market?

Trump tweeted that he would meet Chinese Vice Premier Liu He on Friday to advance a trade deal, bolstering hopes that the U.S. was looking to strike a resolution soon.

Liu is meeting with U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin in Washington, with the hope that the parties can resolve, at least partially, tensions over trade that have stoked anxieties on Wall Street, though it is unclear if a substantive agreement can be achieved.

If Trump’s meeting with Liu takes place, it could assuage concerns among market participants who were whipsawed by conflicting overnight headlines on Thursday, including reports from the South China Morning Post suggesting that the China delegation would leave Washington on Thursday, a day earlier than had been planned. However, a White House spokesperson later told CNBC that no change of plans had occurred with Beijing’s representatives.

Bloomberg News reported that the White House may implement a previously agreed upon currency deal with China ahead of schedule, and suspend tariff hikes to 30% from 25% scheduled to take effect Oct. 15 on some $250 billion in Chinese products. Those moves would be part of a first-phase agreement with China, the report said, with negotiations on critical issues such as intellectual-property rights and forced technology transfers coming at a later time.

Separately, the New York Times reported Wednesday night that Trump had approved issuing licenses to some U.S. companies to conduct business with Chinese telecom giant Huawei Technologies. The U.S. blacklisted Huawei earlier this year, and allowing sales of non-sensitive products could help defuse trade tensions.

“If Trump and Liu He do meet, it’s clearly a positive to the market,” said Quincy Krosby, chief market strategist at Prudential Financial. “At this point, the market would be satisfied with the continuation of talks as long as tariffs do not increase next week. But we’ve had dress rehearsals for this where the meetings don’t take place.”

“Last night’s headlines was reminiscent of the chaos around the Chinese delegation canceling their visit to farms in the heartland. Like then, we had different explanations for that,” said Krosby.

In economic data, U.S. consumer price inflation was little changed in September, giving the Federal Reserve room to cut interest rates in late October. Weekly jobless claims fell in early October.

Investors also saw some comfort in commentary from Dallas Fed President Robert Kaplan, who said he’s open-minded on the outlook for further rate cuts. The central bank has already cut its benchmark interest rate by a half percentage point this year.

Which stocks were in focus?

PG&E Corp.’s stock PCG, +11.87%  plunged 29.1% after a judge ruled to allow for a competitive bankruptcy plan, opening up the path for Elliott Management Group and other bondholders to push for their own chapter 11 plan. Their proposal would involve raising new money and using most of PG&E’s equity to pay off the utility firm’s debts. The utility also faced intense criticism over pre-emptive power cuts in Northern California, where more than 1.5 million people were without power Thursday.

Delta Air Lines Inc. ’s DAL, -0.38%   shares fell 1.5% after profit forecasts for the fourth quarter were less upbeat than expected. Still, the airline’s third-quarter results beat earnings expectations.

Shares for Ra Pharmaceuticals Inc. RARX, +0.04%  surged 101.1% after Belgian biopharma company UCB agreed to acquire the Massachusetts-based biopharma company for $2.5 billion.

Kroger Co.’s stock KR, +1.89% retreated 2.8% after a Jefferies analyst called the grocer’s tech investment into Ocado a “misstep,” downgrading the company to hold from buy.

Shares of Bed Bath & Beyond Inc. BBBY, +5.09%  rallied 21.6% after it announced that former Target Corp. TGT, +1.46%  head of merchandise Mark Tritton will take over as chief executive officer.

How did other assets trade?

The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +3.86% climbed 6.4 basis points to 1.649%.

Gold futures fell after posting small gains on Wednesday. December gold GCZ19, -0.92% was down $11.90, or 0.8% to settle at $1,501.20 an ounce.

West Texas Intermediate crude for November delivery CLX19, +0.92% rose 96 cents, or 1.8%, to settle at $53.55 a barrel on the New York Mercantile Exchange.

In Asia overnight Thursday, trade was mixed, as Hong Kong’s Hang Seng Index HSI, +2.34%  added 0.1% to 25,707.93, the China CSI 300 000300, +0.96% rose 0.8% to reach 3,874.64, and Japan’s Nikkei 225 NIK, +1.15% gained 0.5% to 21,551.98. The Stoxx Europe 600 SXXP, +1.85%, meanwhile, closed 0.7% higher to 382.76.

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