By Clive McKeef
U.S. stocks closed higher Thursday, recovering from early losses, after New York Federal Reserve President John Williams said the central bank’s wisest strategy is to cut interest rates at the first sign of economic distress when interest rates are already low.
How are the major benchmarks performing?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.01% ended up 3.12 points at 27,222.97, the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.15% rose 10.69 points, or 0.4%, to finish at 2,995.11 and the Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +1.25% ended 22.04 points, or 0.3%, lower at 8,207.24.
All three benchmarks halted a two-session skid.
Separately, the Dow Jones Transportation Average /zigman2/quotes/210598063/realtime DJT +1.24% finished 1.3% higher on the day, recovering some of its 3.6% slump from the previous session.
What’s driving the market?
Investors bid stocks slightly higher following comments from Williams. “When you have only so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress,” he said, in a speech at a research conference in New York.
Stocks rebounded from morning losses, and bond yields slipped, as did the U.S. dollar in the wake of what investors saw as confirmation of an interest cut at the Fed’s next policy meeting.
Thursday is the last day for Fed policy makers speeches before the so-called blackout period for comment by officials ahead of the FOMC meeting July 30-31.
Meanwhile, investors are still monitoring corporate earnings though and concerned about the lack of progress in resolving the U.S. China trade dispute.
To date, about 12% of S&P 500 index companies have reported quarterly results this earnings season and 84% have reported better-than-expected earnings, according to FactSet data.
“The big question for investors this quarter is how much import tariff costs are reflected in analysts’ earnings estimates,” John Lynch, Chief Investment Strategist at LPL Financial said in a note.
Import tariffs on Chinese goods remained in place after President Trump’s meeting with China President Xi at the G-20 Summit in Japan last month.
Stocks closed lower for a second day in a row on Wednesday after The Wall Street Journal reported that trade negotiations between the U.S. and China had faltered over restrictions on Chinese telecommunications giant Huawei, citing sources familiar with the talks.