- Trade optimism helps Wall Street close the week on a positive note.
- Financials and energy lead the rally on Friday.
Major equity indexes in the U.S. started the day in the positive territory and extended their gains on renewed optimism surrounding the U.S.-China trade conflict. Reflecting the strong appetite for risk, the CBOE Volatility Index, Wall Street’s fear gauge, dropped more than 8%.
After Chinese news agency Xinhua reported that the U.S. and Chinese officials were able to reach consensus on major issues in these week’s talks, President Donald Trump confirmed this week’s progress in trade talks by saying that they were very close to having a real trade deal with China. Trump further announced that he was planning to meet his Chinese counterpart Xi following the next round of trade negotiations in Washington next week. Furthermore, President Trump signed the spending bill to avoid another government shutdown but declared a national emergency in order to receive the funds that he needs to build the border wall.
Commenting on these developments, “It’s a relief rally, now that Trump is going to sign the (spending) bill and (the) China trade (dispute) looks like its coming to a resolution. It’s going to be a long process but it’s looking positive,” Doug Cote, chief market strategist at Voya Investment Management in New York, told Reuters.
Positive market mood boosted the yields on the T-bond yields and the rate-sensitive S&P 500 Financials Index gained more than 2% on the day. Moreover, trade optimism allowed crude oil to extend its rally and allowed the S&P 500 Energy Index to close 1.6% higher.
When the closing bell rang, the Dow Jones Industrial Average was up 1.7%, the S&P 500 and the Nasdaq Composite were up 1.04% and 0.42%. For the week, these three indexes added 3.1%, 2.5%, and 2.4% respectively.
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