By Mark DeCambre, MarketWatch , Andrea Riquier
Fed grew more worried about economy at September meeting,
minutes show
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 were also parsing minutes from the most recent Federal
Reserve meeting as expectations for further rate cuts have risen in
recent weeks.
How are benchmarks performing?
The Dow Jones Industrial Average rose 204 points, or 0.8%, at
26,366. The S&P 500 index gained 29 points to reach 2,921, up
about 1%, while the Nasdaq added 87 points, or 1.1%, to 7,910.
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).
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 Wednesday,
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, and drove 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/powell-says-economic-expansion-can-last-but-there-are-risks-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, released Wednesday,
(http://www.marketwatch.com/story/fed-had-grown-more-worried-about-economy-at-september-meeting-minutes-show-2019-10-09)
showed that Fed officials have become somewhat more concerned about
the state of the U.S. economy, with several Fed officials arguing
that the chances of a U.S. recession ""had increased notably in
recent months."
The meeting notes showed the central bank is split over the
proper trajectory of monetary policy, with several members
believing that the Fed should not have cut rates in September,
while others have argued for an even more aggressive stance.
Following a series of disappointing manufacturing and service
sector survey data on the U.S. economy last week, market
expectations for a third-consecutive rate cut at the upcoming Oct.
30-31 meeting has risen to 80.7% from 60.7% a month ago, according
to CME group data
(https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html).
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.
Read: Fed grew more worried about economy at September meeting,
minutes show
(http://www.marketwatch.com/story/fed-had-grown-more-worried-about-economy-at-september-meeting-minutes-show-2019-10-09)
See also: Fed's Powell says planned bond buying isn't emergency
stimulus; investors are skeptical
(http://www.marketwatch.com/story/feds-powell-says-planned-bond-buying-isnt-emergency-stimulus-investors-are-skeptical-2019-10-09)
Stocks to watch
Dow component Johnson & Johnson(JNJ) shares fell 2.3%
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 1.579% from
1.532% late Tuesday.
(http://www.marketwatch.com/story/gold-edges-higher-ahead-of-trade-talks-2019-10-09)Gold
futures ended higher on Wednesday to post 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 $8.90, or 0.6%, to $1,512.80 an ounce, after
settling at $1,503.90 an ounce on Tuesday.
Oil futures traded lower Wednesday
(http://www.marketwatch.com/story/oil-prices-climb-though-us-crude-supplies-rise-a-4th-week-but-product-stocks-decline-2019-10-09)
after the U.S. government reported a fourth straight rise in crude
supplies.West Texas Intermediate crude for November delivery was
down 13 cents to $52.49 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 closed 0.4% higher.
(http://www.marketwatch.com/story/european-stocks-drift-lower-on-china-worries-and-lse-stumbles-2019-10-08)--
Mark Decambre contributed to this report
(END) Dow Jones Newswires
October 09, 2019 14:43 ET (18:43 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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