Wall Street records substantial gains as Trump-Juncker trade summit boosts sentiment

• Trump and Juncker agree to lower trade barriers.
• Technology, industrials, and health sectors add more than 1%.
• Facebook reports disappointing earnings after the  closing bell.

Major equity indexes in the U.S. started the day on a positive tone on Wednesday but struggled to gain momentum as investors stayed on the sidelines while waiting for headlines from the critical Trump-Juncker trade summit.

In the second half of the session, reports of US President Trump securing concessions from Europeans boosted the market sentiment and allowed indexes to record sharp gains in the last hours before the closing bell. Confirming the reports, “we agreed today, first of all, to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods,” Trump told the press at a joint press conference with the EC President Juncker following their meeting at the White House.

“In a nutshell, the market is continuing to be dominated by trade and earnings. Those are the two big issues,” Leo Grohowski, chief investment officer of BNY Mellon Wealth Management in New York, told Reuters. The risk-sensitive S&P 500 Information Technology Index gained 1.5% and the S&P 500 Industrials Index, which has been hurt the most on trade conflict concerns, added 1.33%.  

In the meantime, crude oil continued to recover last week’s losses after the weekly EIA report showed a higher-than-expected draw in crude oil stocks in the U.S. and the S&P 500 Energy Index rose 0.9%.

The Dow Jones Industrial Average added 172.64 points, or 0.68%, to 25,414.58, the S&P 500 rose 25.66 points, or 0.9%, to 2,846.06 and the Nasdaq Composite gained 91.47 points, or 1.17%, to 7,932.24. After the closing bell, Facebook reported a Q2 earning of $13.23 billion to fall short of the market expectation of $13.33 billion. Facebook shares lost more than 7% in after hour trading and could force the tech-heavy Nasdaq Composite to lose its momentum on Thursday.

DJIA Technical Outlook (via FXStreet Chief Analyst Valeria Bednarik)

“The daily chart for the Dow shows that the Momentum indicator lags, as the index opened below Tuesday’s close, heading lower within positive levels, but also that the RSI picked up, heading strongly up around 70. In the same chart, the 20 DMA is advancing above the 100 and 200 DMA, all of which favors a continued advance for this Thursday.”

“Shorter term, and according to the 4 hours chart, the index is firmly bullish rallying above all of its moving averages and with technical indicators heading sharply north near overbought levels, with no aims of changing course.”

According to the analyst, supports for the pair could be seen at 25,382, 25,330, and 25,281 while resistances align at  25,450, 25,498, and 25,551.