- Dow Jones rises on rejuvenated hopes of a US-China trade deal.
- Traders ignored weak economic data on Wednesday, but Friday’s jobs report will still be a critical risk event for the Dow.
- Despite all signs pointing to the contrary, Wall Street appears to be banking on Trump somehow avoiding having to implement the next wave of import tariffs.
The Dow Jones rallied on Wednesday as White House staffers did their best to discredit Donald Trump’s remarks in London about the state of trade war talks.
Weak ISM and ADP data were shrugged off by the stock market, but this Friday’s job report won’t be so easy for Dow bulls to ignore.
Meanwhile, a fresh wave of tariffs come into effect on December 15th, but bold investors continue to bet on de-escalation in the trade war.
Dow Jones Rallies as White House Does Damage Control
All three of the major US stock market indexes were trading higher on Wednesday afternoon. The Dow Jones Industrial Average rebounded 199.42 points or 0.73% to 27,702.23.
The Nasdaq and S&P 500 assembled similar rallies, bouncing 0.68% and 0.78%, respectively.
It was a cautious day for the gold price, as the haven metal slid 0.34% amid the Dow bounce. A considerably larger than expected draw of almost 5 million barrels from US crude inventories helped send the oil price soaring 4.33%.
Trade War Update Helps the Dow Recover
After two days of trade war turmoil, the stock market was back to drinking the “trade war progress” Kool-Aid. White House sources told Bloomberg that talks were progressing and Donald Trump’s remarks were “off the cuff.”
Dow bulls interpreted this as “ignore the president,” and equity traders are clearly still banking on the December 15th tariffs somehow being avoided at the last minute.
Stock Market Outlook May Still Be Strong Even If 2020 Starts Slow
Despite a sizeable portion of Wall Street anticipating a slowdown in US GDP in 2020, the stock market remains resilient.
Sebastian Galy at Nordea Asset Management says that the grass could be green for investors willing to ride out a temporary storm in the Dow.
He told CCN.com,
The market is likely looking beyond the next 6 months of economic slowdown, which doesn’t mean it won’t have an impact in the equity market, but the next phase is historically the best with leading indicators pointing up and a Fed likely easing.
Extra accommodation from Jerome Powell is going to be reliant on economic data deteriorating. Another bad ISM number on Wednesday, this time in non-manufacturing PMI – alongside a rare slip in ADP non-farm employment – certainly has things trending towards more interest rate cuts.
Dow Jones bulls certainly appear ready to ignore the macro data in favor of a very tired trade war storyline. Friday’s jobs report will provide crucial information as to how the economy is really stacking up, and traders might find it harder to shrug off.
Dow 30: Apple Rebounds, Boeing Struggles After United Snub
The Dow 30 was a sea of green on Wednesday, bolstered by an impressive rebound from Apple (AAPL) stock, which rose more than 1.15%. It looks to have been a stellar Thanksgiving for cell phone sales, and bulls wasted no time snapping up AAPL shares as sentiment improved.
It was a much less impressive day for the Dow Jones’ most heavily weighted stock, as Boeing (BA) shed earlier gains and ultimately fell 0.35%. Subduing the aerospace manufacturer was the news that United Airlines was investing in Airbus planes to replace their aging Boeing 757 fleet. Although this does not directly reflect diminished demand for the 737 Max, it is the latest in a series of blows to Boeing’s once-buoyant order book.
Exxon Mobil and Chevron were also heading higher on the day, though they did not react as strongly as the massive spike in crude oil might have suggested.