Stocks rally on trade meeting news, solid economic data
U.S. stocks ended sharply higher on Thursday after the U.S. and China were scheduled to renew trade talks and strong economic data from the labor market and services sector.
The Dow Jones Industrial Average picked up 373 points, or 1.4%, to around 26,728, based on preliminary numbers. The Nasdaq Composite finished higher by 1.8% to around 8,117. The S&P 500 rose 1.3% to finish near 2,976.
The trade meeting, which was announced by China, is expected to take place in Washington in early October. The news helped lift equities across the globe and extend the prior day's rally in the U.S. futures market.
The positive bias was reinforced heading into the open as the ADP Employment Change Report for August and the weekly initial claims report provided a healthy insight into the U.S. labor market. Better-than-expected factory orders and non-manufacturing activity for August solidified the risk-on sentiment that was upheld throughout the rest of the session.
Information technology, consumer discretionary, and industrials sectors were among today's leaders. The financials sector also outperformed amid a sell-off in the U.S. Treasury market that sent yields noticeably higher.
The 2-yr yield increased ten basis points to 1.54%, and the 10-yr yield increased 11 basis points to 1.57%.
Likely helping boost U.S. sentiment was data on the labor market, including payrolls processor Automatic Data Processing Inc.'s estimate that the private sector added 195,000 jobs in August, above the 150,000 consensus expectation. New applications for unemployment benefits, meanwhile, ticked up to 217,000 during the week ended Aug. 31, near historic lows.
A final estimate of second-quarter productivity growth confirmed a 2.3% rise, after a 3.1% gain in the first quarter. Unit labor costs, however, were raised to a 2.6% gain from a 2.4% gain. The labor readings come ahead of the important nonfarm-payroll report on Friday, which could give the most significant measure to date of the health of the U.S. economy.
The U.S. services sector slowed in August, which fell from 53.0 in July to 50.7 in August, below the flash estimate issued two weeks ago. The more closely watched ISM nonmanufacturing index, however, came in at 56.4%, up from the 53.7% reading in July and above the consensus estimate of 54.2% expected.
Factory orders in July rose 1.4%, above the 0.6% increase in June and the 1.2% consensus forecast.
BUllion prices ended lower at Comex on Thursday, 5 September 2019. Gold prices dropped on Thursday, posting their largest one-day dollar loss in almost three years to settle at a two-week low. News that the U.S. and China agreed to work toward a fresh round of trade talks next month provided a boost to U.S. and global stock markets, and a stronger-than-expected private-sector employment data also helped to ease worries about a slowdown in the economy, damaging the metal's haven appeal.
Gold for December delivery on Comex fell $34.90, or 2.2%, to settle at a two-week nadir of $1,525.50 an ounce, giving up the roughly 2% gain it scored over the past two trading sessions. Prices marked their biggest single-session percentage decline since June 15, 2018, and largest daily dollar loss since Nov. 11, 2016, according to Dow Jones Market Data.
December silver fell 74 cents, or 3.8%, to $18.807 an ounce, after settling Wednesday at its highest since September 2016. The most-active contract saw its largest one-day dollar and percentage decline in more than a year.
A rally in oil futures faded by the end of Thursday's trading session, on 3 September 2019 prompting U.S. prices to erase nearly all of their earlier gains as plans for U.S.-China trade talks next month failed to fully calm nervousness over the outlook for the global economy. Oil prices were up by nearly 3% to touch session highs following a third straight weekly drop in U.S. crude stockpiles, heightened tensions in the Middle East and news of the trade talks. Prices pulled back sharply just ahead of the end of the regular trading session.
West Texas Intermediate crude for October delivery edged up by 4 cents, or 0.07%, to settle at $56.30 a barrel on the New York Mercantile Exchange after trading as high as $57.76. A 4.3% rally on Wednesday marked the biggest dollar and percentage gain since July 10.
The global benchmark, November Brent crude climbed by 25 cents, or 0.4%, to $60.95 a barrel on ICE Futures Europedown from a high of $62.40. It rose 4.2% a day earlier.
Trading volume picked up into the close, with approximately 2.1 billion shares exchanging hands at the Nasdaq trading floor in total. This was its highest participation in nearly two weeks.
Looking ahead, investors will receive the Employment Situation report for August on Friday.
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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)