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Sept. 12, 2019, 4:41 p.m. EDT

Dow logs 7th gain in a row on renewed trade optimism, ECB stimulus

ECB cuts interest rates further into negative territory; U.S. and China to meet on trade in October

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By Chris Matthews and Mark DeCambre, MarketWatch


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China-U.S. detente?

The Dow marked its longest win streak in more than a year Thursday, after the European Central Bank’s announced fresh stimulus measures, including an interest-rate cut that moved a deposit rate further into negative territory, raising hopes that the Federal Reserve may also enact easy-money policies next month.

The market had been on an uptrend early in the day following reports suggesting that U.S. and China trade aggressions continued to soften ahead of meeting next month.

How are the major benchmarks performing?

The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.95% rose 45.41 points, or 0.2%, to close at 27,182.45, notching a seventh advance and the longest series of gains for the blue-chip index since an eight-session rally ended May 14, 2018, according to FactSet data. Meanwhile, the S&P 500 index /zigman2/quotes/210599714/realtime SPX -0.39% added 8.64 points, or 0.3%, to finish at 3,009.57, while the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -0.83% advanced 24.79 points, or 0.3%, to end at 8,194.47.

All three benchmarks ended the day off their best levels as market’s pulled back as the index’s came within striking distance of recent closing highs.

Thursday’s action left the Dow and S&P just about 0.7% and 0.5% from their respective record closes, while the Nasdaq ended the day 1.6% from its all-time closing high.

What’s driving the market?

The Dow reversed modest Thursday morning losses to turn higher after Bloomberg reported that the Trump administration at it is considering an interim deal to avoid planned tariff increases, but White House sources immediately denied the U.S. was working on such a deal .

And there was skepticism about a deal from money managers such as DoubleLine Chief Executive Jeffrey Gundlach, who said he did not believe there would be a trade deal before the U.S. presidential election next year.

The news followed tweets by President Trump Wednesday announcing he would delay a tariff hike —from 25% to 30%—that was scheduled to take effect Oct. 1, until Oct. 15., “as a gesture of goodwill.”

A separate report in The Wall Street Journal cited Chinese officials, who are looking to narrow the scope of the negotiations to exclude national security issues, as it hopes to make progress on the tariff front. The moves come as American and Chinese representatives are slated to meet in early October to restart stalled trade negotiations and avert any further escalation of animosities between the economic superpowers.

No date has been set to begin the high-level trade discussions, but the latest olive branch did help to reflect a momentary softening of tensions between Beijing and Washington, which had rattled global economies, because an outright trade war could further weaken an already international economy.

See also : U.S. wants to make progress in solving China trade dispute: Mnuchin

“The S&P 500 has now fully retraced the August pullback, and in doing so has priced in a lasting U.S.-China trade truce and aggressive [global] central bank easing…and no more geopolitical surprises,” wrote Tom Essaye, president of the Sevens Report in a Thursday note to clients.

“Proof of that is evident in the lack of a rally despite the short tariff delay announcement,” he added. “At these levels, a trade “truce” (so no more tariffs) is mostly priced into stocks, just a delay won’t be a positive catalyst—the market already expects more.”

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
26,770.20
-255.68 -0.95%
Volume: 293.61M
Oct. 18, 2019 5:08p
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/zigman2/quotes/210599714/realtime
US : S&P US
2,986.20
-11.75 -0.39%
Volume: 1.99B
Oct. 18, 2019 5:08p
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/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
8,089.54
-67.31 -0.83%
Volume: 1.82M
Oct. 18, 2019 5:16p
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