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US markets end significantly higher on optimism about US-China trade talks

16 Feb 2019 Evaluate

The US markets ended significantly higher on Friday amid increasing hopes for a US-China trade deal. As per the report, officials from both the US and China will continue trade talks next week in Washington, raising hopes of a near-term deal between the world's two biggest economies. A statement from the White House said high level US-China trade talks this week led to progress between the two parties but noted much work remains. The White House said the US hopes to see additional progress as discussions at the ministerial and vice-ministerial levels continue in Washington next week. Investors also took note of report that lawmakers and President Donald Trump managed to avoid another government shutdown. Trump still decided to declare a national emergency to obtain additional funds for his controversial border wall, although the move is not likely to have an immediate impact as it will face significant legal challenges.

On the economic front, the preliminary data from the University of Michigan showed a bigger than expected rebound in consumer sentiment in the month of February. The report said the consumer sentiment index climbed to 95.5 in February after tumbling to 91.2 in January. Street had expected the index to rise to 93.0. Surveys of Consumers chief economist Richard Curtin said the rebound in consumer sentiment reflected the end of the partial government shutdown as well as a more fundamental shift in consumer expectations due to the Federal Reserve's pause in raising interest rates. Meanwhile, traders overlooked a report from the Federal Reserve showing an unexpected decrease in industrial production in January. The Fed said industrial production fell by 0.6% in January after inching up by a downwardly revised 0.1% in December. Investors had expected production to tick up by 0.1% compared to the 0.3% increase originally reported for the previous month. The unexpected drop in industrial production came as manufacturing output slumped by 0.9% in January after climbing by 0.8% in December.

Dow Jones Industrial Average surged 443.86 points or 1.74 percent to 25883.25, Nasdaq jumped 45.46 points or 0.61 percent to 7472.41 and S&P 500 was up by 29.87 points or 1.09 percent to 2775.60.

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