US Market ends at fresh record high on trade deal optimism

The US stock market finished session at fresh record high on Tuesday, 26 November 2019, due to optimism that the United States and China will soon agree an interim deal to halt their trade war and and an upbeat assessment of the economy from Federal Reserve Chairman Jerome Powell. However, market gains caped as some investors opted sideline ahead of Thursday's Thanksgiving Day holiday, which will see U.S. markets closed, followed by an abbreviated trading session on Friday. At closing bell, the Dow Jones Industrial Average rose 55.21 points, or 0.2% to 28,121.68, while the S&P 500 index rose 6.88 points, or 0.2% to 3,140.52 The Nasdaq Composite Index gained 15.44 points, or 0.2%, to close at 8,647.93.

Investors were encouraged by positive comments from US President Donald Trump, Chinese President Xi Jinping and Chinese state-owned media about the chance for an imminent trade deal. A Chinese state-backed tabloid said Beijing and Washington were very close to an initial pact. Also, Chinese Vice Premier Liu He, U.S. Trade representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin discussed issues related to a "phase one" trade agreement and agreed to maintain communication on remaining issues. The report came on the heels of comments over the weekend by a top U.S. official that an agreement was still possible by the end of the year, dampening worries the negotiations could spill over into 2020.

During an Oval Office event Tuesday, U.S. President Donald Trump said that Washington was in the final throes in its efforts to reach a trade deal with China, but also underscored that Americans stand with pro-democracy protesters in Hong Kong.

The United States has imposed tariffs on Chinese goods in a 16-month long dispute over trade practices that the US government says are unfair. China has responded in kind with its own tariffs on US goods. If both sides cannot reach an agreement soon, the next important date to watch is Dec. 15, when Washington is scheduled to impose even more tariffs on Chinese goods.

Meanwhile, Fed Chair Powell, in remarks Monday evening, outlined an optimistic view of the U.S. economy but signaled that low inflation would likely keep interest rates low. The Fed chief said that the central bank's three rate cuts this year have helped to spur home purchases, contributing to the economy's longest expansion on record. On Tuesday Federal Reserve Board Gov. Lael Brainard called for a major overhaul in how the Fed sets U.S. interest rates, while speaking Tuesday at the New York Association for Business Economics.

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