Stocks climbed Wednesday and recouped some of their losses from prior days on hopes that a U.S. trade deal with China may be nearing, despite tough recent talk from President Donald Trump.
The market has swung sharply for months on every hint of progress about talks between the world’s largest economies, and the latest flip-flop followed a report from Bloomberg News saying U.S. negotiators expect a “Phase 1” trade agreement to be completed before U.S. tariffs are set to rise on Chinese products Dec. 15. It comes just a day after Trump said he wouldn’t mind waiting until after the 2020 elections for a deal, a remark that officials reportedly called off the cuff but nevertheless sent markets skidding.
“The trade war will be the key driver of sentiment in the immediate few weeks,” DBS Group analysts wrote in a report.
Beyond China, Trump has been pushing ahead on trade disputes all around the world recently. On Tuesday, he proposed tariffs on $2.4 billion in French products in retaliation for a tax on global tech giants including Google, Amazon and Facebook. That follows a threat Monday to raise tariffs on steel and aluminum from Argentina and Brazil.
The trade war has hurt manufacturers and weighed on economic growth around the world. Central banks have cut interest rates and unloaded stimulus to help spur growth. In the United States, a strong job market is also helping to prop up the economy.
KEEPING SCORE: The S&P 500 was up 0.7% as of 10:30 a.m. Eastern time. It was on track to recover about a third of its losses from the prior three days.
The Dow Jones Industrial Average climbed 196 points, or 0.7%, to 27,698, and the Nasdaq composite rose 0.7%.
YIELDS: Treasury yields also recouped some of their sharp drops from earlier in the week. Rising optimism on trade means less demand for safe investments, and when prices for Treasurys fall, their yields rise.
The yield on the 10-year Treasury rose to 1.77% from 1.71% late Tuesday. It was at 1.83% on Monday.
ENERGIZED: A rebound in the price of crude sent oil-related stocks to the market’s biggest gains. Energy stocks in the S&P 500 rose 1.6% for the biggest gain among the 11 sectors that make up the index. Halliburton rose 4%, and Devon Energy added 4.4%.
ECONOMIC SURPRISES: A report on the U.S. jobs market came in surprisingly weak, which could raise doubts about what’s been the strongest part of the economy. Private employers added just 67,000 jobs last month, according to payroll processor ADP. That’s roughly half of October’s hiring pace and weaker than economists expected.
The more comprehensive jobs report from the Labor Department will arrive on Friday, and it will likely have a bigger impact on the market. The numbers are key because a solid job market has helped U.S. households to keep spending. That in turn has made up for weak spending by businesses, which have held off on expansions and other plans given all the uncertainty about global trade.
A separate report showed that U.S. services industries grew last month, but not as quickly as economists expected. The ISM Non-Manufacturing index slowed to 53.9 in November from 54.7 the prior month. That’s still above 50, which is the dividing line between growth and contraction, but it fell short of the 54.5 reading that economists forecast.
EXPEDITED MOVES: Expedia Group jumped to the biggest gain in the S&P 500 after it shook up its leadership. Both CEO Mark Okerstrom and CFO Alan Pickerill resigned at the request of the company’s board, effectively immediately. Chairman Barry Diller and Vice Chairman Peter Kern will manage day-to-day operations as the board decides on its long-term leadership.
The company also expanded its stock buyback program, authorizing the purchase of an additional 20 million shares.
Expedia, whose stock plunged last month after reporting weaker-than-expected quarterly results, rose 7.1%.
COMMODITIES: Benchmark U.S. crude rose $2.08, or 3.7%, to $58.18 per barrel as members of OPEC prepare to meet later this week and vote on production levels. Brent crude, the international standard, climbed $2.12, or 3.5%, to $62.94.
Natural gas fell 2.3%, while gold and silver had more modest losses. Copper, which often moves with expectations for global economic strength, rose 1.3%.
MARKETS ABROAD: European stock indexes were higher, while Asian markets sank.
The French CAC 40 jumped 1.4%, and the German DAX returned 1.2%. The FTSE 100 in London added 0.2%.
Japan’s Nikkei 225 fell 1%, South Korea’s Kospi lost 0.7% and the Hang Seng in Hong Kong dropped 1.2%.
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