US Dow hits new record on trade deal optimism

The US stock market finished session at new records for a second straight day on Tuesday, 05 November 2019, as investors risk sentiments boosted up on hopes over a pause for the U.S.-China trade war. Stocks have received a further boost from a largely better-than-expected third-quarter earnings season, the Federal Reserve's interest rate cut and upbeat economic data. At closing bell, the Dow Jones Industrial Average inclined 30.53 points, or 0.11%, to 27,492.63. The Nasdaq Composite advance 1.48 points, or 0.02%, to 8,434.68, while the S&P 500 eased 3.65 points, or 0.12%, to 3,074.62.

Optimism over negotiations between the U.S. and China remained intact Tuesday, after helping to drive benchmark indexes further into record territory on Monday. Investors were optimistic that, as part of phase one of trade talks between the United States and China, the US will suspend tariffs on $156 billion of Chinese imports scheduled to take effect on December 15 and possibly roll back the September 1 tariffs on about $110 billion in goods.

 

Since the United States and China agreed to a "phase one" trade deal in October, the progress seemed to have stalled as it remains unclear when and where the two parties will sign the agreement. Still, there is good news that the United States is assessing current tariffs on Chinese imports as the parties work to finalize the "phase one" trade deal, according to officials. No decisions have been made beyond the previously announced tariff relief.

Over three quarters of S&P 500 companies that have reported results so far have beaten profit expectations

Financials, a big weight for value stocks, were the best performing S&P sector, up 0.71% as benchmark U.S. Treasury yields hit a six-week high. In contrast, the rate-sensitive real estate sector dropped 1.72%.

In economic news, US ISM Service Sector Growth Surges In October-- the Institute of Supply Management's U.S. service sector activity index rose to 54.7 in October, up from 52.6 in September, easing concerns that a slowdown in the manufacturing sector was spreading to other parts of the economy. The bigger than expected increase by the headline index came as the business activity index rebounded to 57.0 in October from 55.2 in September and the new orders index jumped to 55.6 from 53.7. The employment index also showed a notable increase, surging up to 53.7 in October from 50.4% in September and indicating a reacceleration in the pace of job growth in the service sector. Meanwhile, the report said the prices index slumped to 56.6 in October from 60.0 in September, pointing to a slowdown in the pace of job growth. Any reading above 50 indicates improving conditions.

US Trade Deficit ShrinksTo $25.5 Billion In September-- The US trade deficit narrowed in the month of September, as the value of imports slumped by more than the value of exports, a report released by the Commerce Department on Tuesday showed. The Commerce Department said the trade deficit narrowed to $52.5 billion in September from a revised $55.0 billion in August. The deficit shrank as the value of imports tumbled by 1.7% to $258.4 billion in September after climbing by 0.5% to $262.9 billion in August.

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