(Reuters) -The main U.S. stock indexes rallied to one-week highs on Wednesday on hopes for a de-escalation in the U.S.-China trade war and as President Donald Trump scaled back his threats to fire Federal Reserve Chair Jerome Powell.
The prospect of negotiations between Washington and Beijing, currently locked in an escalating tit-for-tat tariff war, helped lift sentiment after a Wall Street Journal report cited a senior White House official as saying that U.S. tariffs on China were likely to come down to between roughly 50% and 60%.
The stock market was already in recovery mode after Trump said late on Tuesday he had “no intention” of firing Powell, walking back last week’s market rattling comment that the Fed chair’s termination could not come “fast enough” that had drawn heavy criticism.
In morning trade, the Dow Jones Industrial Average was up 2.48%, the S&P 500 up 2.99% and the Nasdaq Composite 4.00%.
COMMENTS:
PETER CARDILLO, CHIEF MARKET ECONOMIST AT SPARTAN CAPITAL SECURITIES, NEW YORK “There seems to be some light at the end of the tunnel here in terms of the trade war. Investors are beginning to feel more confident that perhaps the worst of the trade rhetoric is over, that we’ve probably hit a temporary short-term bottom and stocks are likely to move a little bit higher in the coming days.”
PETER ANDERSEN, FOUNDER OF ANDERSEN CAPITAL MANAGEMENT, BOSTON”Whether or not they are permanent statements or transient statements, we still do not have enough evidence to take a stand one way or the other. Certainly the market doesn’t agree with me because the market responds instantaneously to any good or bad news as we’re seeing today.”
“In my view, unless the President or the administration comes out with consistent statements and, by consistent, I mean by more than a 24-hour news cycle, this is a temporary rally.””However, it is showing signs, these types of rallies based on news like this certainly act as a guidepost for what the investors are hoping to have as a resolution. We see that anytime there is a hint of not firing the Fed or easing on the tariffs or close to a tariff agreement, we see a very strong rally for the day, but not necessarily over the longer term.”
(Compiled by the Global Finance & Markets Breaking News team)
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