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Stocks surge on optimism about U.S.-China trade talks

Peter Mazza, James Riley
Specialist Peter Mazza, left, and trader James Riley work on the floor of the New York Stock Exchange on Tuesday.
(Richard Drew / Associated Press)

U.S. stocks finished broadly higher Tuesday as investors grew more optimistic about the prospects for a resolution to the costly trade dispute between the United States and China.

Technology, financial and healthcare stocks powered much of the rally. The upswing was the benchmark Standard & Poor’s 500 index’s biggest gain this month and brought the index to a three-day winning streak. The wave of buying also snapped the Dow Jones industrial average’s four-day losing streak, pushing that index up 372 points.

President Trump said Tuesday that he might let a March 2 deadline slide in trade talks with China if the two countries get close to a deal. Earlier, the White House had called the date a “hard deadline.”

Both nations are trying to reach a deal before March 1. That’s when additional tariffs are due to kick in, escalating the conflict and further hurting companies and consumers with higher prices on materials and products.

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“Any deal would help alleviate some of the uncertainty,” said Karyn Cavanaugh, senior markets strategist at Voya Investment Management. “The [economy] hasn’t been dinged that much from the trade tariffs, it’s really been the uncertainty. It’s spilling over into business plans, and that’s a hurdle for growth.”

The S&P 500 rose 34.93 points, or 1.3%, to 2,744.73. The Dow climbed 372.65 points, or 1.5%, to 25,425.76.

The Nasdaq composite climbed 106.71 points, or 1.5%, to 7,414.62. The Russell 2000 index of smaller-company stocks, which has been leading the other indexes this year, rose 19.25 points, or 1.3%, to 1,538.23.

Stocks got an early boost Tuesday after U.S. lawmakers reached a tentative deal to avoid another partial government shutdown. The agreement on border security involves far less money for a wall than the White House wanted, and it’s not clear whether Trump will support the deal.

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Still, the move alleviated some uncertainty for the market as the U.S. and China continue trade negotiations, which resumed Monday.

Fears of a global slowdown still linger. Europe and China have both reported slower growth. Those concerns have dimmed the outlook for corporate earnings growth this year.

The current wave of company earnings reports has featured solid profit growth for the final three months of 2018 but caution about conditions going forward. Analysts predict profits will fall in the current quarter, according to FactSet.

“Overall earnings are good, but we’re looking for a bit of a slowdown in the first quarter because we have a high bar to hurdle over,” as last year’s first-quarter growth was so strong, Cavanaugh said.

Under Armour shares climbed 6.9% after the sportswear maker posted results that beat Wall Street forecasts. A surge in international sales offset a downturn in Under Armour’s U.S. sales.

Molson Coors plunged 9.4% as lower sales volume weighed down revenue and profit during the fourth quarter. The brewer also said it will restate some past results, prompted by tax accounting errors in 2016 and 2017.

Coty — which makes CoverGirl, Max Factor and other cosmetics — jumped 12.5% after German conglomerate JAB Holdings offered to take a majority stake in the company.

Technology stocks helped power the market’s gains Tuesday. Micron Technology climbed 4.7%. Financial companies also notched big gains. Brighthouse Financial surged 13.9%.

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U.S. benchmark crude rose 1.3% to $53.10 a barrel in New York. Brent crude, the standard for international oil prices, rose 1.5% to $62.42 a barrel in London.

Bond prices fell. The yield on the 10-year Treasury rose to 2.68% from 2.66%.

The dollar rose to 110.52 yen from 110.40 yen. The euro strengthened to $1.1331 from $1.1276.

Gold rose 0.2% to $1,314 an ounce. Silver was little changed at $15.69 an ounce. Copper fell 0.6% to $2.77 a pound.

Wholesale gasoline rose 0.6% to $1.43 a gallon. Heating oil rose 0.9% to $1.90 a gallon. Natural gas rose 1.7% to $2.69 per 1,000 cubic feet.


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