Published: Thu, January 16, 2020
Markets | By Otis Pena

USA stocks gain following phase-one trade deal with China

USA stocks gain following phase-one trade deal with China

Analysts said the choppy trading session reflected worries about lofty U.S. stock valuations following the market's surge since the fall.

Healthcare stocks made up a large part of the market gains. Utilities and makers of household goods also rose.

KEEPING SCORE: The S&P 500 index rose 0.4% as of 11:45 a.m.

The Dow gained 90.55 points, or 0.3%, to 29,030.22, a record. Of those companies, 82% have posted better-than-expected profits. The Russell 2000 picked up 6.66 points, or 0.4%, to 1,682.40.

Prices for the 10-Year U.S. Treasury gained, lowering yields to 1.78% from Tuesday's 1.81%.

President Trump "wants the US economy to be humming along going into the presidential election", said Lyn Graham-Taylor, fixed-income strategist at Rabobank.

Beijing also agreed to enforce intellectual property regulations, and back a "bilateral evaluation and dispute resolution arrangement" that would see the two countries work in partnership to deal with disputes over copyright, intellectual property and patents. The punitive tariffs for Chinese goods are still around $ 360 billion.

But investors are concerned that the trade deal with China will keep tariffs in place on almost two-thirds of Chinese goods at least until the presidential election in November. -China trade deal, as well upcoming fourth-quarter earnings reports.

It's earnings season for the biggest American financial institutions, with Morgan Stanley and Bank of New York Mellon Corp. still to come. Strong earnings growth this year will help determine whether the stock market continues to rally.

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Gold miners also gained, with Newcrest Mining adding 30.5 cents, or 0.97 per cent, to $31.625 cents. The sector relies on China for sales and supply chains, and it benefits from better trade relations.

The S&P/ASX200 was up a hefty 45.6 points, or 0.65 per cent, at 7040.4 at 1030 AEDT on Thursday, after briefly touching 7041.6. Edison International climbed 2.5%.

In earnings news, Bank of America (BAC) beat expectations but finished the day with a 1.8% loss.

West Texas Intermediate crude oil added 0.5% to $58.10 a barrel. Valero Energy dropped 3.3%.

USA and European stock futures were largely flat Thursday in wake of the signing of the U.S. The revival in mortgage applications reflects the increased demand for home ownership, suggesting that many buyers want to buy their own home instead of waiting for the traditional start of the season to buy their home in late February. Hovnanian Enterprises climbed 4.5%.

OFF THE MARK: Target slumped 7.3% after a disappointing holiday shopping season prompted the retailer to cut its forecast for a key sales measure in the fourth quarter. The company said weak sales of electronics, toys and home goods crimped its sales growth to just 1.4% in November and December.

The reference price for crude oil fell 42 cents to $ 57.81 a barrel. Brent crude oil, the worldwide standard, fell 49 cents to close at $64 a barrel.

The euro advanced 0.3 per cent to US$1.1157, the strongest in more than a week on the biggest gain in more than a week. Heating oil fell 3 cents to $ 1.88 a gallon. Natural gas fell 7 cents to $2.12 per 1,000 cubic feet. Copper fell 1 cent to $2.87 a pound.

The yen was at 109.90 per dollar, little changed. The Shanghai Composite closed 0.5% lower.

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