While you were sleeping: Wall St rallies as US puts 'trade war on hold'
By Margreet Dietz
May 22 (BusinessDesk) - Wall Street rallied amid optimism that the US is backing off its recent protectionist stance in
an effort to resolve an international trade dispute with China.
The rally comes a day after US Treasury Secretary Steven Mnuchin said that “we are putting the trade war on hold,”
bolstering the outlook for US equities.
“I suspect that we’ll continue to trend higher sans some major disappointing news,” Gordon Charlop, managing director at
Rosenblatt Securities in New York, told Reuters.
“This is an indication of what we’ll see near term, because we are through earnings, relatively light on macro data, and
with geopolitics, it seems like some of the emotion has been reduced between now and the Korean summit,” according to
Charlop.
Meanwhile, NAFTA talks between the US, Mexico and Canada also continue, and Mnuchin warned Monday that “there are still
some very significant, open issues.”
“We’ll see where we get over the next few weeks,” Mnuchin told CNBC. “We’re still trying to get a new deal done. That is
a priority for the president,”
In 2.15pm trading in New York, the Dow Jones Industrial Average rallied 1.2 percent, while the Nasdaq Composite Index
gained 0.4 percent. In 2pm trading, the Standard & Poor’s 500 Index climbed 0.8 percent.
“In our view the fundamentals remain attractive for further upside in equities stateside and globally in the months
ahead so long as progress persists in trade talks with China and among the members of NAFTA, and so long as the Fed
remains sensitive to the economy in its process of interest rate normalisation,” John Stoltzfus, the chief investment
strategist at Oppenheimer & Co, wrote in a note to clients Monday, Bloomberg reported.
For further clues on the path of US rate hikes, investors will eye minutes from this month’s Federal Open Market
Committee meeting, due for release on Wednesday, as well as comments from Fed Chair Jerome Powell, who is set to speak
in Stockholm on Friday.
The Dow rose, led by gains in shares of Boeing and those of General Electric, recently up 3.8 percent and 2.9 percent
respectively. The only Dow stocks to post declines were Merck and Johnson & Johnson, recently down 0.9 percent and 0.3 percent respectively.
Shares of GE climbed after the company agreed to merge its transportation business with Wabtec in a transaction valued
at about US$11.1 billion. Shares of Wabtec also rose, trading 3.8 percent higher as of 2.28pm in New York.
US Treasuries slipped, lifting yields on the 10-year note one basis point to 3.067 percent, according to Bloomberg.
In Europe, Stoxx 600 Index finished the session with a 0.3 percent gain from the previous close. The UK’s FTSE 100 Index
climbed 1 percent, while France’s CAC 40 Index rose 0.4 percent.
Germany’s financial markets were closed for a public holiday.
(BusinessDesk)
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