U.S. stocks are turning higher after the Wall Street Journal reported that U.S. officials are considering reducing the new tariffs on Chinese imports as part of trade negotiations between the two countries and more in Thursday’s Stock Market Update. Technology, industrial and health care companies are making the largest gains.
STOCK MARKET UPDATE
KEEPING SCORE: The S&P 500 index rose 19 points, or 0.8 percent, to 2,635 at closing time. The Dow Jones Industrial Average added 162 points, or 0.7 percent, to 24,370. It was nearly flat before the Journal report came out and spiked 267 points shortly afterward. The Nasdaq composite gained 49 points, or 0.7 percent, to 7,084. The Russell 2000 index of smaller-company stocks climbed 10 points, or 0.7 percent, to 1,465.
US-CHINA TENSIONS: The trade spat between the U.S. and China remained a chief area of concern for investors. Citing sources close to the discussions, The Wall Street Journal said officials including Treasury Secretary Steven Mnuchin are willing to lift some or all of the import taxes the U.S. announced last year in a bid to convince Chinese leaders to make deeper reforms.
It’s just the latest conflicting detail from the trade dispute. Earlier in the day, China’s government said the top trade envoys from both countries will meet in Washington at the end of this month, a possible sign of progress in negotiations. But late Wednesday, the Journal said U.S. prosecutors might bring criminal charges against Chinese technology giant Huawei over possible theft of trade secrets.
THE QUOTE: After three months of big swings that were linked to trade talk developments, investors have adjusted to the uncertainty, said Gina Martin Adams, the chief equity strategist for Bloomberg Intelligence. She said investors want hard data and clear answers about what international trade will look like.
“These issues between Huawei and trade have been a constant source of volatility and uncertainty that is weighing on sentiment,” she said. “Any permanence on the issue is going to be deemed an improvement.”
LEADERS: Among tech companies, Apple added 1 percent to $154.46 and chipmaker Nvidia gained 2.3 percent to $152.20. Industrial companies also stand to benefit from greater trade and faster economic growth. Defense contractors made strong gains after President Donald Trump called for a space-based missile defense system following a strategy review by the Pentagon.
Defense contractor Northrop Grumman gained 3.9 percent to $265.83, Lockheed Martin rose 2.6 percent to $279.01, and Raytheon rose 2.1 percent to $162.71. Aerospace company Boeing advanced 2.6 percent to $361.09.
Elsewhere Fastenal, which makes industrial and construction fasteners, jumped 5.4 percent to $57.05 after it said customers became a bit less cautious about spending in December.
Among health care companies, drugmaker AbbVie added 2.2 percent to $87.40 and medical device maker Becton Dickinson picked up 2.1 percent to $236.06 after it said it had a strong fiscal first quarter.
BANKS CLANK: Morgan Stanley skidded 3.4 percent to $42.96 after its earnings and revenue disappointed analysts. Like a number of other big financial companies, Morgan Stanley was hurt by difficulties in trading during the volatile fourth quarter. While Morgan Stanley’s traders are considered some of the best in the business, their stock trading revenue was flat over the last three months of the year and bond trading revenue tumbled 30 percent. The S&P 500 lost 14 percent during the last quarter of the year.
TARNISHED: Signet Jewelers plunged 24.3 percent to $25.22 after it said its holiday season had been difficult and slashed its annual forecasts. The company said competition grew tougher in December and sales of some key products were weak. The company also said fewer customers came to its stores last month.
A series of big luxury retailers including department stores like Macy’s have said they struggled over the holidays even though consumer confidence is high and pay for workers is rising. The stock market’s steep losses in December appear to have made some consumers reluctant to splurge.
HARD DRIVE HARD TIMES: Western Digital lost 3.7 percent to $36.42 and Seagate shed 2.5 percent to $38.71 as digital storage companies sank.
BONDS: Bond prices edged lower. The yield on the 10-year Treasury note rose to 2.74 percent from 2.73 percent.
ENERGY: Benchmark U.S. crude oil fell 0.5 percent to $52.41 a barrel in New York, while Brent crude, the international standard, gave up 0.2 percent to $61.18 a barrel in London.
OVERSEAS STOCK MARKET UPDATE: The British FTSE slipped 0.4 percent and the CAC 40 of France fell 0.3 percent. Germany’s DAX dipped 0.1 percent.
Hong Kong’s Hang Seng dropped 0.5 percent and Japan’s Nikkei 225 index edged 0.2 percent lower. South Korea’s Kospi added 0.1 percent.
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