Good gains at Wall Street

Consumer-discretionary and industrial shares lead rally

U.S. stocks came off earlier highs but still closed up on Tuesday, 18 September 2018 as investors shrugged off escalating trade tensions to instead focus on the robust economy.The gains were underpinned by consumer-discretionary and industrial shares, the so-called cyclical sectors which tend to thrive during periods of strong economic growth.

The Dow Jones Industrial Average climbed 184.84 points, or 0.7%, to 26,246.96. The S&P 500 index advanced 15.51 points, or 0.5%, to 2,904.31 and the Nasdaq Composite Index climbed 60.32 points, or 0.8%, to 7,956.11.

Meanwhile, as expected, the Trump administration announced 10% import duties on $200 billion in Chinese goods, representing a range of products, including luggage and seafood, which will come into force on Sept. 24 and rise to 25% by the end of the year. China responded with tariffs on $60 billion in U.S. goods.

The ICE U.S. Dollar Index, a gauge of the buck against a half-dozen currencies, was up less than 0.2% at 94.464. It has lost 0.5% month to date.

Reviewing Tuesday's economic data, it was limited to the NAHB Housing Market Index for September. The NAHB Housing Market Index for September came in at 67 (consensus 66), unchanged from the August reading.

Bullion prices ended lower at Comex on Tuesday, 18 September 2018. Gold futures ended lower on Tuesday, but held above $1,200 an ounce for a sixth session in a row, as the next jabs emerged in the intensifying U.S.-China trade dispute, prompting cautious trading in the U.S. dollar. Metals for industrial use, tied to the fortunes of the powerful Chinese and U.S. economies, continued to move with sensitivity to the trade developments.

December gold fell $2.90, or 0.2%, to settle at $1,202.90 an ounce Tuesday. Prices for the most-active contract have now settled above $1,200 for six-consecutive trading sessions. They gained 0.4% on Monday.

December silver declined by 0.3% to $14.185 an ounce. It ended just above the recent low of $14.142, set late last week, which marked the lowest settlement for a most-active contract since January 2016.

The consumer discretionary and information technology sectors outperformed on Tuesday after leading Monday's retreat. The trade-sensitive industrial sector was also strong, as was the energy space which benefited from a rise in the price of crude oil; WTI crude futures jumped 1.5% to $69.87/bbl.

Crude oil futures settled more than 1% higher on Tuesday, 18 September 2018 as risks to global crude supplies escalated ahead of data that are expected to reveal a fifth-straight weekly decline in U.S. inventories. Recent remarks from Saudi Arabian officials reportedly expressed a renewed level of comfort with higher prices in light of renewed U.S. sanctions on Iran that could disrupt global output.

The U.S. benchmark, West Texas Intermediate crude futures for October delivery rose 94 cents, or 1.4%, to settle at $69.85 a barrel on the New York Mercantile Exchange. November Brent, the global benchmark, climbed 98 cents, or 1.3%, to $79.03 a barrel on ICE Futures Europe.

In the bond market, U.S. Treasuries tumbled on Tuesday, sending yields higher across the curve, with the benchmark 10-yr yield jumping five basis points to 3.05% - which marks its highest level in four months. The Fed-sensitive 2-yr yield ticked up one basis point to 2.79%, hitting its highest level in over a decade.

On Wednesday, investors will receive the weekly MBA Mortgage Applications Index, August Housing Starts and Building Permits, and the Q2 Current Account Balance.

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