Instant View: Wall Street hits records on hopes tariffs will be dropped

 Instant View: Wall Street hits records on hopes tariffs will be dropped

(Reuters) - U.S. stock indexes jumped to new highs on Thursday, and Treasury yields rose, after President Donald Trump tweeted that a trade deal with China was "very close" and on a report that U.S. trade negotiators had offered to cancel a fresh round of tariffs on Chinese goods.

The S&P 500, Dow Jones Industrials and the Nasdaq opened lower then reversed after Trump's statement, which comes just before tariffs are due to go into effect on Sunday. The indexes had slipped from record levels two weeks ago.

The Wall Street Journal reported U.S. negotiators have offered to slash existing tariffs by as much as half on roughly $360 billion of Chinese-made goods, supporting the bounce.

MARKETS:

** The S&P 500 briefly rose more than one percent to hit a record intraday high of 3,176.28 and was last up 0.87%.

** MSCI's all-country world index, tracking shares in 49 countries climbed to 551.84 points to surpass the previous record of 550.63 points set in Jan 2018.

** The yield on the U.S. 10-year Treasury note rose to a four-week high and was last at 1.8974%, up from 1.79% late on Wednesday.

** The U.S. dollar index was up about 0.3%.

COMMENTS:

WILLIE DELWICHE, INVESTMENT STRATEGIST, BAIRD, MILWAUKEE, WISCONSIN

    "I don't think many people expect a definite conclusion to what's happening between the U.S. and China. But if we can reach some status quo and if things aren't continuing to deteriorate, maybe that can be taken as a positive. I would say the view today, what Trump is saying and what China is responding, would suggest that maybe we are more at a status quo level of a detente than we are at further deterioration in relationships between the U.S. and China.”

    “I think the implication from today would be they are certainly going to delay the tariffs that are supposed to go on this weekend.”

"Whether its a one-day event for the market or a basis for something to build on, that remains to be seen. But certainly the news of some progress between the U.S. and China, I think that's good news for stocks and good news for the global economy.”

    “There has been some evidence that things globally are maybe getting a little bit better, and I think this adds fuel there."

BURNS MCKINNEY, PORTFOLIO MANAGER, ALLIANZ GLOBAL INVESTORS, DALLAS

   "The reason things have rebounded is the President's comment that the U.S. is close to a deal. ... Until we actually have something firm I'm skeptical.”

    "The Fed meeting, the UK election and the ECB meeting are potential speed bumps. The Dec. 15 deadline is not a speed bump. That's a great big pot hole."

    "It's extremely important the new tariffs don't go into place. For the last several months there's been a lot of noise on trade. This is not noise. This is the real thing, an important deadline."

    "All the trade escalation thus far has left the U.S. consumer largely insulated .... They've slowed down industrial investment. The U.S. consumer is the one pillar that's been holding up the economy and the Dec. 15 tariffs are the ones that finally dig in where it hurts."

    "If you put these (tariffs) in place I worry it's a chance it's the crucial block in the Yenga tower. Sometimes there's that one block that sends the tower crashing. It would certainly be negative for the economy."

JOE SALUZZI, CO-MANAGER OF TRADING, THEMIS TRADING, CHATHAM, NEW JERSEY

"The market is definitely pricing in a trade deal, no question about it. You’ll probably get a ‘sell the news,’ since it’s already priced in. If there is no deal, that will be a big problem on Monday.”

“Even though it feels like we keep going up, up, up, a year ago we had a disaster in December. We got crushed. So when you look over a longer time period, it seems like a nice, steady path up to me.”

“We’re certainly on the upper end of a fair valuation. But if we get a good deal and take geopolitical risk out, why can’t we go higher?”

ART HOGAN, CHIEF MARKET STRATEGIST AT NATIONAL SECURITIES IN NEW YORK

“What this market has been trying to tell us is that we want to continue to work towards a deal. (From) October coming into last week was very much that ‘hey we are working on phase one’ so that is constructive. And constructive means that if we actually get a phase one deal done there is likely to be no further escalation from that point. That is the beginning of the end and the market sees that as returning some certainty to the economies and certainly to corporations. The big delta here has been that there is consumer confidence and a lack of corporate confidence and that is holding back corporate spending."

"The market is saying we can remain constructive as long as you are working towards a deal. Escalation means bad things for both the market and the economy. That is what the market is telling us today.”

(Compiled by Alden Bentley)

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Updated Date: Dec 13, 2019 00:08:37 IST