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Stocks Climb on Trump's Plan to Meet With China Trade Negotiator

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10/10/2019 | 12:58pm EDT

By Avantika Chilkoti and Amrith Ramkumar

U.S. stocks rallied Thursday after President Trump said he would meet with a key Chinese official for talks Friday, the latest example of trade hopes boosting global markets.

The Dow Jones Industrial Average rose 129 points, or 0.5%, to 26475, after earlier climbing more than 250 points. The S&P 500 added 0.6%. The broad equity gauge entered the session down nearly 2% so far in October and roughly 3.5% below July's record, though it was still up 16% for the year. The tech-laden Nasdaq Composite advanced 0.5%.

The gains came after Mr. Trump said on Twitter that he would meet with Chinese Vice Premier Liu He, the head of the Chinese negotiating team, at the White House Friday, contradicting earlier media reports that Chinese leaders would be leaving Washington Thursday, a day earlier than expected.

Thursday's moves were the latest example of trade-induced volatility in markets. Global indexes and stock futures swung between gains and losses overnight on conflicting reports. Fears that the U.S. and China won't reach a ceasefire on tariffs have led to projections that a global economic slowdown will ripple to consumers, denting spending and crimping corporate profits.

Negotiations continued Thursday after the White House signed off on special licenses for some U.S. companies to do business with Chinese telecom giant Huawei Technologies Co., a possible sign of goodwill. At the same time, the U.S. adding 28 Chinese entities to an export blacklist earlier in the week also prompted caution among investors.

"There's some cause for optimism there, but it does seem to be a very fluid situation," said Steven Violin, a portfolio manager at F.L.Putnam Investment Management. "It's been a true roller coaster...The winds seem to change daily."

Trade hopes also boosted commodities crucial to transportation and manufacturing by easing worries that softening demand will result in supply gluts. Both copper and oil rallied nearly 2%, trimming some of their recent losses.

Still, if the two sides can't reach a trade deal and U.S. tariffs on some Chinese products rise as scheduled next week, some analysts say they expect an even sharper slowdown in economic activity. New consumer imports are also set to be added to the list of duties in mid-December.

Those worries add pressure on the Federal Reserve and other central banks that are cutting interest rates to help global growth stabilize. Figures Thursday showed that U.S. consumer prices were flat last month, the latest sign of muted inflation that could give the Fed more room to cut rates for the third time this year.

Earlier in the week, figures showed that prices businesses receive fell unexpectedly in September from the previous month.

Treasury yields rose following the data Thursday, with the yield on the benchmark 10-year U.S. Treasury note rising to 1.651%, according to Tradeweb, from 1.585% a day earlier. Yields, which move inversely to prices, have fallen in recent months as investors have sought safety in bonds.

Some investors remain skeptical that earnings and economic data will rebound moving forward, raising concerns that even more interest-rate cuts will limit the Fed's ability to counteract a recession later.

"That's one of the big, raging debates right now: Do Fed rate cuts matter?" said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. "There are dangers to interest rates actually getting too low."

Among individual stocks, shares of Delta Air Lines slid 2% after the company's quarterly results added to concerns about rising carrier costs. Third-quarter reporting season for large companies begins in earnest next week, with S&P 500 firms expected to post a drop in profits from a year earlier.

Bed Bath & Beyond soared 21% after the struggling retailer tapped Target's Mark Tritton as its next chief executive.

And PG&E tumbled nearly 30% after the judge presiding over its bankruptcy handed shareholders a loss, opening the door to a competition over the best path out of bankruptcy that pits the troubled utility against bondholders led by Elliott Management Corp.

Elsewhere, the Stoxx Europe 600 climbed 0.6%. In Asia, the Shanghai Composite Index gained 0.8%, while Japan's Nikkei 225 rose 0.4%.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com and Amrith Ramkumar at amrith.ramkumar@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
CHINA-SHANGHAI COMP -1.32% 2938.14 End-of-day quote.17.63%
DJ INDUSTRIAL -0.95% 26770.2 Delayed Quote.15.85%
NASDAQ 100 -0.93% 7868.490778 Delayed Quote.25.48%
NASDAQ COMP. -0.83% 8089.54332 Delayed Quote.22.81%
NIKKEI 225 0.18% 22492.68 Real-time Quote.10.95%
S&P 500 -0.39% 2986.2 Delayed Quote.19.59%
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