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U.S. stocks were slighly higher Tuesday morning, boosted by better-than-expected data on the service sector, after the three main U.S. equity benchmarks hit new records on Monday on fresh hopes for a U.S – China trade deal.
How are major indexes performing?
The Dow Jones Industrial Average DJIA, +0.12% was up 53 points, or 0.2%, at 27,519, while the S&P 500 index SPX, -0.06% was up 1.2 points at 3,079, and the Nasdaq-100 COMP, +0.02% advanced 8 points, or 0.07%, at 8,437.
On Monday, the Dow DJIA, +0.12% advanced 114.75 points, or 0.4%, to finish at 27,462.11, surpassing its previous record close of 27,359.26, set on July 15. The Nasdaq Composite Index COMP, +0.02% gained 46.80 points, or 0.6%, to close at 8,432.20, while the S&P 500 index SPX, -0.06% rose 11.36 points, or 0.4%, to end at 3,078.27. The Nasdaq and S&P 500 ended at record highs for the second consecutive session.
All three equity benchmarks also hit records on Monday. The last time the three major indexes ended at record highs on the same day was July 15, according to Dow Jones Market Data. The Dow’s year-to-date gain now stands at around 18%, while the S&P 500 is up more than 22% and the Nasdaq more than 27% so far this year.
What’s driving the market?
Optimism over negotiations between the U.S. and China remained intact Tuesday, after helping to drive benchmark indexes further into record territory on Monday, even though reports suggest that Beijing is driving a hard bargain against the backdrop of further signs of weakness in the world’s second-largest economy.
As part of a so-called phase one agreement Chinese officials are pushing for the removal of U.S. import duties that have been imposed since September as well as eliminating tariffs that are set to be imposed on Dec. 15 on China’s imports.
The Wall Street Journal and Financial Times (paywall), citing people familiar, reported that U.S. and Chinese officials were actively considering rolling back some tariffs to complete the partial trade agreement.
The U.S. has already put off tariff hikes from 25% to 30% on $250 billion of Chinese imports that were to have taken effect in October, and has suggested it may put off tariffs on another $160 billion in Chinese goods set to take effect Dec. 15 if an initial trade deal is signed
Chinese negotiators want the removal of 15% tariffs on about $125 billion worth of goods that went into effect Sept. 1 and the $250 billion of import duties, CNBC reported.
“In summary, the trade talks are moving in the direction we had anticipated, as China leans on the Trump administration to remove some of the present tariffs to seal the first phase of a trade deal,” wrote Peter Cardillo, chief market economist at Spartan Capital Securities
In economic news, the Institute of Supply Management’s U.S. service sector activity index rose to 54.7% in October, compared to forecasts from Econoday of 53.6%, and up from 52.6% in September. Any reading above 50 indicates improving conditions.
The U.S. trade deficit dropped 4.7% in September to a 5-month low, helped by first oil surplus since 1978, but the U.S. is still on track to post an even larger trade gap in 2019 than it did in 2018. The falling deficit with China tied to higher U.S. tariffs has been more than offset by increasing gaps with other countries such as Mexico, South Korea, Japan and Vietnam.
Which stocks are in focus?
Shares in Uber Technologies UBER, -6.92% fell 7% after the ride-hailing company Monday posted another quarterly loss but forecast that it would reach profitability by the end of 2021.
Peloton Interactive Inc. shares PTON, -6.12% was down 6% after the exercise-equipment maker reported third-quarter results. Ch
Chesapeake Energy Corp.’s stock CHK, -13.46% sank nearly 10% Tuesday, after the oil-and-gas company reported a wider-than-expected loss on revenue the fell more than forecast.
Kroger Co. KR, +8.30% rose in Tuesday after the grocer announced a $1 billion share buyback program during its investor meeting.
Boeing BA, +1.85% rose 1% after CEO Dennis Muilenburg said he would forgo bonuses this year and chairman Dave Calhoun defended the board’s handling of the 737 Max crisis.
How are other assets trading?
The yield of the 10-year U.S. Treasury note TMUBMUSD10Y, +4.58% rose 2.6 basis points to 1.815%.
West Texas Intermediate crude oil for December delivery CLZ19, +0.92% rose 0.7% to $56.96 a barrel on the New York Mercantile Exchange, while gold for December GCZ19, -1.28% on Comex fell 0.5% to $1,503.70 an ounce.
The ICE U.S. dollar index DXY, +0.41%, a gauge of the greenback’s performance against its major rivals, rose 0.2% at 97.649.
In Asia overnight, the China CSI 300 000300, +0.62% added 0.6%, Hong Kong’s Hang Seng Index HSI, +0.49% advanced 0.5%. In Europe, the Stoxx Europe 600’s SXXP, +0.22% gained 0.2%.
