Stocks climbed Tuesday on Wall Street for the third day in a row as the latest round of trade talks between Washington and Beijing continued. It’s the longest winning streak for U.S. indexes since late November.
News reports said the trade negotiations would be extended to a third day, a potential positive sign even though no major developments have been announced so far. Experts say it will take months for them to resolve the causes of the trade war, which include disagreements over the Chinese government’s handling of technology and intellectual property.
Investors have become notably more optimistic about an eventual deal, a sharp reversal of the concerns that helped send stocks plunging in October and December. An agreement between the world’s two biggest economic powers could remove a major obstacle to global economic growth, and many of the biggest gains Tuesday were by companies that usually do better in times of faster growth, including internet, technology and industrial stocks. Oil prices also kept rallying.
Kate Warne, an investment strategist for Edward Jones, said the market’s large moves in recent weeks reflect investors’ questions about major issues including economic growth, the threats of recession and trade tensions, and rising interest rates. She said it’s normal for stocks to repeatedly change course as traders grapple with those issues on a day-to-day basis.
“You have new information that’s driving stock prices both higher and lower, and that’s pretty typical when there’s uncertainty and there’s a lot of new information coming into the market,” she said.
Trading on Wall Street is typically light during the holidays, and that may have contributed to the huge swings in late December and early January, Warne said.
The Standard & Poor’s 500 index rose 24.72 points, or 1%, to 2,574.41 on Tuesday. The Dow Jones industrial average gained 256.10 points, or 1.1%, to 23,787.45.
The Nasdaq composite increased 73.53 points, or 1.1%, to 6,897. The Russell 2000 index of smaller-company stocked climbed 21.19 points, or 1.5%, to 1,426.55.
Railroad operator Union Pacific was one of the biggest gainers in the S&P 500. It surged 8.7% to $150.75 after hiring longtime Canadian National Railway executive Jim Vena as its chief operating officer. Other transportation and industrial companies also jumped. Aerospace giant Boeing rose 3.8% to $340.53. Trucking and logistics company J.B. Hunt rose 2.8% to $95.88.
Among communications firms, Facebook climbed 3.2% to $142.53. Verizon advanced 2.9% to $58.38 after it reported strong wireless-subscriber gains in the fourth quarter. Among consumer-focused companies, Amazon rose 1.7% to $1,656.58 and Nike rose 1.3% to $76.73.
Bond prices fell and yields rose, another sign of optimism about economic growth. The yield on the 10-year Treasury note rose to 2.73% from 2.65% late Monday.
Despite the rise in bond yields, which usually helps banks by sending borrowing rates higher, bank stocks lagged behind the overall market Tuesday.
Investors may have been preparing for future disappointment: Analysts for Goldman Sachs lowered their forecasts for bond yields around the world.
The yield on the 10-year Treasury note has fallen sharply since October, when it reached a seven-year high, and the report says yields “may have peaked for this [economic] cycle.”
South Korean smartphone and computer chipmaker Samsung said demand for chips is weak because the global economy is slowing. Apple said last week that its iPhone sales in China slumped, which traders took as a warning sign about its economy.
Samsung shares fell 1.7% in Seoul, and U.S. chipmakers slipped too. Nvidia fell 2.5% to $139.83.
Car retailer AutoNation said 2019 will be challenging year for sales, and its stock fell 3.9% to $36.18. The company also said it is restructuring its business, and several top executives including its chief operating officer are departing. Used car dealership CarMax fell 2.3% to $64.91, and auto parts retailer AutoZone fell 1.3% to $811.37.
The dollar edged up to 108.65 yen from 108.59 yen. The euro fell to $1.1443 from $1.1478.
Oil prices continued to rally. U.S. crude rose for the eighth day in the last nine, jumping 2.6% to $49.78 a barrel. Brent crude, used to price international oils, climbed 2.4% to $58.72 a barrel.
U.S. crude dropped from $76 a barrel in early October to about $42 a barrel Dec. 24 as investors worried about slowing economic growth and a supply glut. Brighter prospects for growth and higher energy demand have helped send energy prices higher since then.
Wholesale gasoline rallied 1.6% to $1.36 a gallon. Heating oil climbed 2.7% to $1.83 a gallon. Natural gas rose 0.8% to $2.97 per 1,000 cubic feet.