After a strong close yesterday and a pop overnight, stocks rallied once again on Friday amid growing anticipation of U.S.-China trade deal, as the trade talks continue.
The Dow Jones Industrial Average climbed 466 points, or 1.8%, while the S&P 500 rose 1.7%, and the Nasdaq Composite surged 2%. The sizable moves broke the markets of an established trading range and placed the Dow and S&P 500 on target to break a three-week losing streak propelled by impeachment and trade concerns.
Bloomberg News reported that the U.S. and China reached a partial trade deal, mentioning that this could also set up a truce to the ongoing U.S.-China trade war. China would agree to some agricultural concessions while the U.S. would agree to some tariff slackening.
While the market has rocketed higher on the all the enthusiasm, some caution is warranted, as negotiations collapsed in May, which resulted in China letting its currency weaken versus the dollar.
“We’ve been in similar situations before, with some kind of trade agreement seemingly at hand, but then the talks collapse,” said Michael Geraghty, equity strategist at Cornerstone Capital Group. “That’s, in part, reflecting our mercurial president.”
While investors have been leery of trade tensions being resolved quickly, sentiment around U.S.-China trade improved after President Trump told reporters on Thursday that talks between the two countries were going “really well.” His comments came after he tweeted that he would meet with Chinese Vice Premier Liu He at the White House on Friday. Liu and the Chinese trade delegation arrived at the White House around 2:30 p.m. ET.
The president then followed up with a tweet on Friday that “good things” were happening during the talks with “warmer feelings than in recent past.”
He later added, “One of the great things about the China Deal is the fact that, for various reasons, we do not have to go through the very long and politically complex Congressional Approval Process.”
Although there is still time left to go in the trading session, the Mstar Small-Cap Growth Ishares ETF (JKK) and the S&P Midcap 400 SPDR (MDY) both have jumped significantly, up over 2.25% apiece Friday.
For more market trends, visit ETF Trends.