Dow, Nasdaq hit record highs for second consecutive day

Daniel Fowler
November 7, 2019

A senior USA administration official said late Monday tariffs are a key talking point in the ongoing trade talks and some tariffs likely will be rolled back as part of a preliminary deal.

On Wall Street, the Dow Jones Industrial Average rose 36.03 points, or 0.13%, to 27,498.14.

The S&P 500 fell 3 points, or 0.1%, to 3,074. Those are new record highs for both indexes. Phase 1 of the pact, which is scheduled to be signed this month, focuses mainly on agricultural products and could head off another round of tariffs that are scheduled to take effect December 15. -Chinese trade truce following reports Beijing wants Washington to lift punitive tariffs.

The Nasdaq logo is displayed at the Nasdaq Market site in NY, U.S., May 2, 2019. Also, 61% have reported higher than expected sales, which is important in the wake of concerns about an economic slowdown and the U.S.

Adobe Inc rose 3% as the Photoshop software maker raised its fourth-quarter digital media annualized recurring revenue target, boosting the Nasdaq and S&P 500. The drop could be a sign that after a period of nervousness about the economy, when the market responded positively to unexpected signs of strength, investors are returning to interpreting a positive economic surprise as an indication the Federal Reserve might be less likely to cut interest rates, said Mark Hackett, chief of investment research at Nationwide.

China's central bank helped ease worries about a possible liquidity crunch by cutting its base interest rate on a one-year loan by 0.05% to 3.25%.

"We are investing on expectations that whatever the worst is, we're there now", he said. Reports on jobs, growth and consumer confidence in the past couple of weeks have pointed to an economy that is overcoming global threats and expanding for a record-long 11th straight year.

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Upbeat comments by U.S. Commerce Secretary Wilbur Ross about progress in trade talks with China has helped to raise sentiment.

Major U.S. stock indexes have been pushed higher in recent days by better-than-feared corporate earnings.

It was the second consecutive session of closing records for the S&P 500 and Nasdaq, and the first closing record for the Dow since July. And investors have been sharply bidding up the shares of companies that topped expectations. The shares may face increased pressure Wednesday, when a lockup period ends that prevented early investors and executives from selling shares. Its Class A shares plunged 18.9%.

On currency markets, the British pound was up 0.03% at $1.2886 while the euro was off 0.49% to $1.1075. the US dollar index gained 0.44%. The Nasdaq Composite Index was up 46.80 points, or 0.56 per cent, to 8,433.20, Xinhua reported. China sold $3 billion in USA dollars past year and $2 billion in 2017.

"We see it fit to temper optimism for now", said Vishnu Varathan of Mizuho Bank in a report.

Wall Street analysts also poured cold water on trade-deal hopes. "The rally can extend for a one to three month view".

"The sweet spot for global equities looks even more pronounced here and as suggested yesterday, the current debate is not whether you are bullish, but whether there is too much short-term euphoria", Chris Weston of Pepperstone said in a commentary. As Treasury prices fell, the yield on 10-year U.S. Treasurys climbed to 1.862% from 1.787% Monday.

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