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Stocks Open Higher on Signs of Progress in U.S.-China Talks

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11/07/2019 | 09:47am EST

By Caitlin Ostroff

Stocks rose Thursday in early U.S. trading after China said Beijing and Washington agreed to lift some existing tariffs if a deal is struck, signaling that trade talks are progressing.

The Dow Jones Industrial Average index climbed 0.5%, while the broader S&P 500 rose 0.2% and the Nasdaq Composite Index added 0.5%. Earlier, the pan-continental Stoxx Europe 600 gauge had risen 0.2%.

Following negotiations over the last two weeks, China and the U.S. agreed to remove tariffs at the same time and by the same amount when they sign the initial accord, a Chinese Commerce Ministry spokesman said Thursday. The yield on 10-year Treasurys rose to 1.879% from 1.814% on Wednesday.

"It's a very fluid situation that we are in," said Peter Garnry, head of equity strategy at Saxo Bank. "I think the next three months is going to be very interesting for investors."

The progress in negotiations may reduce the likelihood that the Federal Reserve cuts rates in December, according to Mr. Garnry. But he expects the market rally to be short-lived given the damage already done to the global economy, and larger issues -- such as intellectual property -- that still confront both nations.

Meanwhile, shares in Qualcomm rose 5.4% in offhours trading after the chip maker signaled a strong year ahead for 5G phone sales. Expedia fell 13.6% after the online travel company reported quarterly earnings that missed analysts' expectations. Ralph Lauren jumped 9% after the luxury fashion house's quarterly results beat consensus expectations.

Germany's benchmark DAX index advanced 0.8%. Traders have taken the progress in China-U. S. negotiations as a sign that the U.S. may not place tariffs on German autos, which would offer a respite to the nation's hard-hit manufacturing sector, according to David Madden, a market analyst at CMC Markets.

Among European equities, the biggest gainers included Vestas Wind Systems, which rose 11.7% after the Danish wind-turbine maker's third-quarter earnings beat forecasts. ArcelorMittal rallied 6.3% after profit for the world's largest steelmaker beat expectations, and shares in German conglomerate Siemens gained 5% after it released a better than expected outlook for next year. Sodexo climbed 7.6% after the French food-services and facilities company said revenue beat its fiscal 2019 target.

Later in the day, major U.S. corporations including The Wall Street Journal's parent, News Corp., as well as Walt Disney Co., will report earnings.

The yield on 10-year U.K. gilts eased down to 0.734% after two members of the decision-making committee at the Bank of England voted for a rate cut, a move that signals a more dovish stance than markets had expected. The pound fell 0.4% against the euro and 0.3% against the U.S. dollar.

Gold prices fell by 0.7% while Brent crude, the global benchmark for oil, gained 1.1% as optimism about the trade deal also boosted investors' sentiment about global growth.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
ARCELORMITTAL -0.32% 16.276 Delayed Quote.-10.28%
CMC MARKETS PLC 1.66% 147 Delayed Quote.39.73%
DAX 0.46% 13282.72 Delayed Quote.25.80%
DJ INDUSTRIAL 0.01% 28135.38 Delayed Quote.20.61%
EXPEDIA GROUP, INC. -0.65% 112.76 Delayed Quote.0.10%
GOLD 0.70% 1475.668 Delayed Quote.14.29%
LONDON BRENT OIL 0.70% 64.9 Delayed Quote.18.27%
NASDAQ 100 0.25% 8487.708348 Delayed Quote.31.98%
NASDAQ COMP. 0.20% 8734.879088 Delayed Quote.29.94%
NEWS CORPORATION -1.45% 13.59 Delayed Quote.19.74%
QUALCOMM -1.37% 87.83 Delayed Quote.54.33%
RALPH LAUREN CORPORATION 1.01% 116.92 Delayed Quote.13.01%
S&P 500 0.01% 3168.8 Delayed Quote.26.41%
SIEMENS AG -0.08% 117.78 Delayed Quote.20.95%
SODEXO 1.06% 104.95 Real-time Quote.17.26%
STOXX EUROPE 600 1.09% 412.02 Delayed Quote.20.05%
STOXX EUROPE 600 NR 1.09% 888.86 Delayed Quote.23.56%
VESTAS WIND SYSTEMS -0.18% 681 Delayed Quote.38.39%
WALT DISNEY COMPANY (THE) -0.34% 146.38 Delayed Quote.33.50%
WTI 0.32% 59.76 Delayed Quote.30.11%
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