SOXX iShares Semiconductor ETF

By Mark DeCambre, MarketWatch , Andrea Riquier

Wall Street also awaits minutes from Fed's most recent policy gathering

U.S. stocks rose Wednesday, as China and the U.S. attempted to ease simmering tensions, a day before high-level trade talks are scheduled to commence.

Investors also will watch for the minutes later this afternoon of the Federal Reserve's September policy meeting last month to gather clues on the outlook for interest rates.

How are benchmarks performing?

The Dow Jones Industrial Average rose 192 points, or 0.7%, at 26,357. The S&P 500 index gained 26 points to reach 2,918, up more than 0.9%, while the Nasdaq added 79 points, or 1%, at 7,903.

On Tuesday (http://www.marketwatch.com/story/dow-futures-drift-lower-as-lower-level-china-us-trade-negotiations-get-under-way-2019-10-08), the Dow retreated 313.98 points, or 1.2%, to 26,164.04, while the S&P 500 index gave up 45.73 points, or 1.6%, to 2,893.06. The Nasdaq Composite Indexretreated 132.52 points, or 1.7%, to finish at 7,865.

What's driving the stock market?

Equity markets were boosted by reports that infused some optimism about the possibility of at least a partial U.S. - China trade deal.

A report from Bloomberg News (https://www.bloomberg.com/news/articles/2019-10-09/china-open-to-partial-u-s-trade-deal-despite-tech-blacklist) indicated that China was open to a limited tariff resolution with the U.S., while another from the Financial Times (https://www.ft.com/content/a24f6948-ea77-11e9-85f4-d00e5018f061) (paywall) indicated that China has offered to increase by 50% purchases of agricultural products from U.S. farmers to $50 billion.

The reports come after the U.S. State Department on Tuesday announced visa restrictions (http://www.marketwatch.com/story/us-restricts-visas-for-chinese-officials-involved-in-xinjiang-abuses-2019-10-08)on Chinese government and Communist Party officials who are believed to be involved in abuse of Uighurs and other Muslim minority groups (http://www.marketwatch.com/story/socially-responsible-investors-may-have-unwittingly-backed-police-state-surveillance-in-china-2019-05-30) in Xinjiang, China. That announcement came after the U.S. blacklisted some 28 entities for the same alleged violations, prompting Beijing to reportedly consider rolling out its own visa restrictions on U.S. nationals, according to Reuters (https://uk.reuters.com/article/us-usa-trade-china-visas/china-plans-to-restrict-visas-for-u-s-visitors-with-anti-china-links-idUKKBN1WO0L7).

A representative from China's Ministry of Commerce said: "We strongly urge the U.S. to immediately stop making irresponsible remarks on the issue of Xinjiang" and demanded that the U.S. "stop interfering" in "China's internal affairs, and remove relevant Chinese entities from the list of entities as soon as possible."

Import duties on $250 billion worth of Chinese goods are set to be raised to a rate of 30% from 25% on Oct. 15.

Wednesday's bounce comes from a hope that "this time is different" for the trade talks, said Kim Forrest, founder and chief investment officer at Bokeh Capital Management.

Talks have been "contentious," Forrest said, "but both sides absolutely know something needs to be done." Semiconductor stocks, and ETFs that track them, like the iShares PHLX fund(SOXX) and the ProShares Ultra Semiconductors fund(USD) were up sharply in morning trading, she pointed out, on investor optimism not just about a trade truce, but also better conditions for businesses.

Concerns about international trade issues have been weighing on the market, driving stocks lower on Tuesday even after Federal Reserve Chairman Jerome Powell said the central bank believes the current economic expansion can be sustained, and that the Fed intends to expand its balance sheet (http://www.marketwatch.com/story/treasury-yields-fall-after-us-blacklists-china-tech-firms-2019-10-08) by purchasing short-term U.S. government debt in exchange for bank reserves, in an attempt to quell recent stress in the market for overnight bank-to-bank lending.

Minutes from the rate-setting Federal Open Market Committee's Sept. 17-18 meeting will be released at 2 p.m. Eastern Time Wednesday.

In U.S. economic data, the number of job openings nationwide fell in August (http://www.marketwatch.com/story/us-job-openings-fall-in-august-to-a-1-12--year-low-as-hiring-and-the-economy-slow-2019-10-09)for the third month in a row and hit a one-and-a-half-year low, coinciding with a decline in hiring that's taken place against the backdrop of a slowing U.S. economy.

Stocks to watch

Dow component Johnson & Johnson(JNJ) shares fell 2.1% Wednesday after a Philadelphia jury ordered the company (http://www.marketwatch.com/articles/jjs-johnson-stock-8-billion-punitive-damages-51570629876) to pay $8 billion in damages to a man who said its Risperdal drug caused enlarged breast tissue.

Apple Inc. (AAPL) has been accused of aiding Hong Kong protesters (http://www.marketwatch.com/story/apple-accused-of-unwise-and-reckless-decision-on-tracking-app-by-chinas-peoples-daily-2019-10-09)via an app that allegedly enables tracking of local law enforcement -- representing the latest company ensnared in political tensions between the semiautonomous territory and China.

Fitbit Inc. shares (FIT) jumped after the maker of wearables said it's diversifying its supply chain out of China (http://www.marketwatch.com/story/fitbit-shares-jump-4-premarket-after-company-unveils-plans-to-move-supply-chain-out-of-china-to-avoid-tariffs-2019-10-09)to avoid U.S.-imposed tariffs.

American Airlines (AAL) said it expects Boeing Co.'s 737 MAX will remain out of service until January (http://www.marketwatch.com/story/american-airlines-pushes-737-max-return-to-january-2019-10-09), the latest example of how the grounded plane continues to create additional costs and logistical burdens for carriers and passengers.

How are other markets trading?

The yield on the 10-year U.S. Treasury note rose to 1.572% from 1.532% late Tuesday.

Gold futures headed higher on Wednesday, poised for their first gain in four sessions as traders kept an eye on U.S.-China tariff negotiations, developments around Brexit and economic data. Gold for December delivery was up $8.30, or 0.67%, to $1,512.20 an ounce, after settling at $1,503.90 an ounce on Tuesday.

Oil futures traded higher Wednesday, holding onto the bulk of earlier gains on the back of optimism over U.S.-China trade negotiations, even though the U.S. government reported a fourth straight rise in crude supplies.West Texas Intermediate crude for November delivery was up 48 79 cents to $53.10 a barrel on the New York Mercantile Exchange.

In Asia overnight Wednesday, trade was mixed, with Hong Kong's Hang Seng Index fell 0.8% to 25,682.81, the China CSI 300 rose 0.1% to reach 3,843.24, and Japan's Nikkei 225 fell 0.2%. The Stoxx Europe 600 advanced 0.5%.

Related:European stocks drift lower on China worries and LSE stumbles (http://www.marketwatch.com/story/european-stocks-drift-lower-on-china-worries-and-lse-stumbles-2019-10-08)

(END) Dow Jones Newswires

October 09, 2019 12:30 ET (16:30 GMT)

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