US Stocks close at record highs on U.S.-China trade pact signing

The US equity market finished session at record highs on Wednesday, 15 January 2020, after President Donald Trump signed a highly anticipated phase one trade pact with China. At closing bell, the Dow Jones Industrial Average rose 90.55 points, or 0.3%, at 29,030.22, while the S&P 500 index gained 6.14 points, or 0.2% to 3,289.29, while the Nasdaq Composite Index gained 7.37 points, or 0.1%, to 9,258.70.

President Donald Trump and China's chief negotiator, Liu He, signed the Phase 1 deal before a group of corporate executives and reporters at the White House, marking a truce in the dispute over import tariff which has unsettled markets world-wide and slowed economic growth. The pact eases some sanctions on China. In return, Beijing has agreed to step up its purchases of U.S. farm products and other goods.

The text of the deal includes promises by the Chinese to increase their purchases of U.S. agricultural, manufacturing, and energy products, along with purchases of services, by more than $200 billion over the next two years, though it also states that the parties acknowledge that purchases will be made at market prices based on commercial considerations. It also includes commitments by the Chinese to enforce intellectual property theft laws and a bilateral evaluation and dispute resolution arrangement that will encourage the U.S. and China to work jointly to resolves allegations of patent and copyright infringement or intellectual property theft.

With the Phase 1 agreement now a done deal, investors have more reason to focus on the rollout of corporate earnings reports over the next few weeks.

Health care stocks powered much of the market's gains. UnitedHealth Group rose 2.8% after solid fourth-quarter earnings report. The nation's largest health insurer said its revenue rose 4% on a mix of insurance premiums and growth from urgent care and surgery centers. Anthem gained 1.6%, Cigna added 1.5% and Humana climbed 1.9%.

Technology companies also rose, with companies reliant on China for sales and supply chains leading rally on hopes of better trade relations. Microsoft gained 0.7% and Advanced Micro Devices gained 0.8%.

Financial stocks fell. Bank of America slid 1.8% after reporting weaker profits due to the rapid decline of interest rates in late 2019.

Energy stocks also fell along with the price of crude oil. Benchmark crude oil fell 42 cents to settle at $57.81 a barrel. Brent crude oil, the international standard, dropped 49 cents to close at $64 a barrel. Valero Energy dropped 3.3%.

ECONOMIC NEWS: U.S. wholesale inflation rose 0.1% in December, according to the Labor Department's producer-price index. Year over year, producer prices rose just 1.3%, roughly half the rate in 2018.

A survey of business conditions in various Federal Reserve districts, known as the Beige Book, was released on Wednesday, indicated economic activity expanded modestly during the final six weeks of 2019 and the labor market remained tight with businesses reporting difficulty finding workers, although there were job cuts in the manufacturing, transportation and energy sectors.

CURRENCY NEWS: The dollar fell to 109.91 Japanese yen from 110.00 yen on Tuesday. The euro strengthened to $1.1150 from $1.1128.

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