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Stocks' rebound stretches to a third day

Stocks' rebound stretches to a third day
A view of the New York Stock Exchange. (Justin Lane / EPA/Shutterstock)

U.S. stocks climbed Thursday as major indexes extended their rebound into a third day. The dollar dropped, a change that provided a relief to big exporters such as industrial and technology companies.

Many of the biggest gainers Thursday were stocks that struggled badly during the market decline that lasted nearly the entire month of October, including tech firms and smaller, domestically focused companies.

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Stocks headed higher after President Trump tweeted that he had spoken to Chinese President Xi Jinping and that the two countries were making some progress in trade negotiations. He didn't give details, but there have not been many signs of movement in the trade dispute in recent months, and investors are getting nervous about the prospect of huge tariff increases.

Liz Ann Sonders, chief investment strategist for Charles Schwab, said one reason for the market rout was that companies started to give more details about how much the tariffs could hurt them.

“Companies are saying, ‘This is biting and here's how,’” she said. “They're starting to talk about profit margins and whether they're going to pass the expenses on to consumers.”

Strong earnings from U.S. companies have helped the market recover its footing over the last three days. Chemicals maker DowDuPont jumped after reporting a strong quarter, as did Arm & Hammer maker Church & Dwight and insurer AIG. Apple climbed 1.5% to $222.22 before reporting its latest quarterly results, but it slumped 4% in after-hours trading after saying it sold fewer iPhones than analysts expected and giving a weak forecast for the current period.

The Standard & Poor’s 500 index rose 28.63 points, or 1.1%, to 2,740.37. The Dow Jones industrial average rose 264.98 points, or 1.1%, to 25,380.74. The Nasdaq composite climbed 128.16 points, or 1.8%, to 7,434.06. The Russell 2000 index jumped 33.57 points, or 2.2%, to 1,544.98.

Stocks fell sharply from early October through the last few days of the month, a skid that briefly wiped out their gains for the year. After a rally over the last two days, the S&P 500 is up 2.5% in 2018.

During the sell-\off, high-growth companies such as tech and industrial firms and smaller-company stocks were hit especially hard as investors worried about factors that could slow their growth and their profits. Those included the U.S.-China trade war, rising interest rates that could make it more expensive to borrow money, and higher costs for fuel and other necessities.

DowDuPont surged 8.1% to $58.27 after its third-quarter profit surpassed analysts' estimates. The company said sales grew in all regions, with strong gains in the Asia-Pacific region and Latin America. DowDuPont also said it expects to save more money from a cost-cutting program and plans to buy back an additional $3 billion in stock.

Fitness-tracker maker Fitbit soared 25.8% to $5.95 after reporting quarterly results that beat expectations.

Fertilizer and chemicals maker CF Industries jumped 6.3% to $51.05 after it said it expects better nitrogen fertilizer prices over the next few years.

Exporters rose as the dollar slumped. The ICE U.S. Dollar Index slid 0.9% after reaching a 16-month high Wednesday. A weaker dollar helps companies that do a lot of business outside the United States, as it makes their products more affordable in foreign markets and increases their profits when the income is converted back into dollars.

Aerospace firm Boeing rose 2.3% to $363.07. Farm equipment maker Deere added 3.8% to $140.65. Among chipmakers, Nvidia climbed 3.5% to $218.11 and Advanced Micro Devices leaped 11% to $20.22. The S&P 500 fell 6.9% last month, and technology and industrial companies and retailers fared even worse.

The decline in the dollar also sent metals prices sharply higher. Gold jumped 1.9% to $1,238.60 an ounce. Silver rose 3.5% to $14.78 an ounce. Copper rose 2.4% to $2.72 a pound.

The pound rose sharply following reports that Britain and the European Union had reached a deal to give British financial services companies access to the EU after the U.K. leaves the bloc. The article by the Times of London cited unnamed sources, and other reports suggested a deal had not yet been finalized. The British pound rose to $1.3018 from $1.2771.

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Canadian energy company Encana said it would buy oil and gas company Newfield Exploration for $5.5 billion in stock. Newfield jumped 16.1% to $23.46. Encana dropped 12.6% on the Toronto Stock Exchange.

Oil prices continued to weaken after the Department of Energy said U.S. crude stockpiles increased for the sixth straight week. Benchmark U.S. crude slumped 2.5% to $63.69 a barrel in New York. Brent crude, used to price international oils, slid 2.9% to $72.89 a barrel in London.

Wholesale gasoline fell 2% to $1.72 a gallon. Heating oil slid 2.2% to $2.20 a gallon. Natural gas fell 0.7% to $3.24 per 1,000 cubic feet.

Bond prices rose. The yield on the 10-year Treasury note fell to 3.14% from 3.15%.

The dollar fell to 112.69 yen from 113.06 yen. The euro rose to $1.1409 from $1.1314.

2:30 p.m.: This article was updated with closing prices, context and analyst comment.

This article was originally published at 7:40 a.m.

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