The US stock market roared back to life on Wednesday, and the Dow shot around 50 points higher as Wall Street prepared to close the book on its best June in more than three-quarters of a century.
All of Wall Street’s major indices rallied during the Wednesday session. By 11:38 am ET, the Dow Jones Industrial Average had climbed 49.24 points or 0.19%; the DJIA last traded at 26,597.46 after paring its early-session gains.
The S&P 500 rose 4.66 points or 0.16% to trade at 2,922.16. However, just five of 11 primary sectors reported gains, with Energy (+2.18%) and Technology (+1.48%) leading the charge.
The Nasdaq outperformed its peers, and the tech-heavy index surged 46.99 points or 0.6% to 7,931.33.
The stock market bounced back from Tuesday’s dismal session because investors anticipate a positive outcome from the Trump-Xi meeting later in the week.
While analysts warn that a further escalation would thrust the global economy into a vicious recession, a Bloomberg survey found that nearly three-quarters of economists believe the US and China will either sign an extended truce that cements the present tariff regime or a partial trade deal that reduces or eliminates some tariffs.
Apparently confirming that moderately-bullish outlook, Bloomberg also reports that the White House could ax its plans to impose punitive tariffs on $300 billion worth of Chinese goods.
No firm decisions have been made, but the Trump administration could suspend those tariffs on Saturday, following Trump’s meeting with Xi. The move would signal a thawing of a relationship that took an unexpectedly frosty turn in early May.
Further stoking the flames of investor optimism, US Treasury Secretary Steven Mnuchin teased Wall Street with the surprising claim that a full trade deal remained on the table despite the myriad escalations in US-China relations over the past two months.
“We were about 90% of the way there (with a deal) and I think there’s a path to complete this,” Mnuchin said.
However, Mnuchin has been floating the 90% figure for months, long before the negotiations screeched to a grinding halt. He and National Economic Council Director Larry Kudlow have been performing a good cop/bad cop routine, with Mnuchin’s optimistic forecasts frequently followed by Kudlow’s bearish portents.
The real trigger for the recovery appears to be Trump’s likely decision to suspend tariffs on another $300 billion worth of Chinese imports.
Talk is cheap. Tariffs are not.
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Last modified (UTC): June 26, 2019 11:41