Wall Street Sees Gains Driven by Trade Optimism and Energy Stocks

Image Credit: Reuters

On Tuesday, the three major stock indexes closed higher, boosted by energy stocks, as investors remained optimistic about a potential U.S.-China trade breakthrough after President Donald Trump delayed tariffs for Canada and Mexico.

U.S. tariffs of 10% on Chinese imports took effect, prompting China to impose counter-tariffs on U.S. goods. While the timing of talks between the countries was uncertain, Trump expressed no urgency in negotiations. Energy stocks led the gains in the S&P 500, climbing 2.18%, while utilities and consumer staples saw declines.

Trump had previously announced a 25% tariff on goods from Mexico and Canada but agreed to pause the measure for 30 days, in exchange for concessions on border issues and crime. Sam Stovall, CFRA Research's chief investment strategist, noted that the quick pause suggested Trump might be seeking a swift declaration of victory without significant changes to trade policy.

Investor optimism was also fueled by strong corporate earnings, with 76.8% of the 211 S&P 500 companies reporting better-than-expected results for the fourth quarter. Palantir's shares surged 24% following a revenue forecast that exceeded Wall Street estimates. Alphabet rose 2.6% ahead of its quarterly results, but the stock fell more than 7% in after-market trading after posting revenue that missed expectations due to a slowdown in its cloud business.

The Dow Jones Industrial Average rose 134.13 points, or 0.30%, to 44,556.04, the S&P 500 gained 43.31 points, or 0.72%, to 6,037.88, and the Nasdaq Composite added 262.06 points, or 1.35%, to 19,654.02.

Biotech firm Illumina dropped 5.3%, and PVH Corp, which owns brands like Calvin Klein, slid nearly 1% after being placed on China's "unreliable entity list." 

Several Federal Reserve officials warned that trade tariffs could lead to inflation risks, with one suggesting that the uncertainty could slow interest rate cuts.

The Labor Department's report showed U.S. job openings at 7.6 million in December, lower than the estimated 8 million.

In earnings-driven moves, PepsiCo dropped 4.5% after issuing a profit forecast below expectations, while Estee Lauder plunged 16.1% following weak demand and job cuts. Merck lost 9.1% after halting shipments of Gardasil to China due to weak demand for the HPV vaccine. PayPal fell 13.2% after reporting a decline in its operating margin.

Advancing issues outpaced decliners on both the New York Stock Exchange and Nasdaq, with 121 new highs and 61 new lows on the NYSE. Volume on U.S. exchanges totaled 13.39 billion shares, below the 15.53-billion average of the last 20 trading days.

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.