U.S. stocks recovered from a weak start to trade higher Wednesday afternoon, shrugging off renewed concerns about international trade and monetary policy, after a multi-week rally that saw benchmark indexes touch fresh highs.
How are major indexes trading?
The Dow Jones Industrial Average was up 114, or 0.4%, at 27,805. The S&P 500 rose 4 points, or 0.2%, to 3,095. The Nasdaq was up 7 points, or 0.1%, to 8,493.
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Bulls and bears fought to a standstill Tuesday as far as the Dow DJIA, +0.08% was concerned, with the blue-chip gauge ending unchanged at 27,691.49. The S&P 500 SPX, -0.10% rose 4.83 points, or 0.2%, to end at 3,091.84, while the Nasdaq Composite COMP, -0.26% rose 21.81 points to end at 8,486.09, up 0.3%. The finish marked a record close for the Nasdaq, while the Dow and S&P 500 remain near their highs.
What’s driving the market?
Federal Reserve chairman Jerome Powell testified before the Joint Economic Committee of Congress late morning, the first of two congressional appearances this week. Interest rates are on hold unless there is a material deterioration in the economy, Powell said before Congress and in published remarks.
“We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2% objective,” Powell said.
The Fed has cut interest rates in three quarter-point moves since July, putting the Fed’s benchmark federal funds rate in a range of 1.5%-2%.
Powell’s testimony “suggests that the bar to raise rates is higher than to lower them, even if easier policy is no longer the default option,” said Sal Guatieri, BMO Capital Markets senior economist.
Meanwhile, the prospect of a U.S. – China trade deal remains the main factor sustaining a rally that has pushed U.S. stocks record highs in the past five weeks.
In a Wednesday speech at the Economic Club of New York, Trump said a “significant phase one” deal could happen soon, but only if the deal worked to the advantage of U.S. workers and businesses.
The Wall Street Journal late Wednesday reported that the question of whether the U.S. has agreed to remove existing tariffs as part of a partial phase-one deal or whether the U.S. would only cancel tariffs that are set to take effect on Dec. 15 has become a sticking point.
“Overall, the calm in the trade war and the broader risk-on sentiment of recent weeks may be more fragile than they appear, and with markets having gone on a euphoria rally lately, it might not take much bad news to trigger a notable correction,” Marios Hadjikyriacos, investment analyst at XM, in wrote.
In U.S. economic data, inflation was slightly higher than expected in October, the Labor Department said Wednesday morning. The consumer price index was up 0.4% during the month, a bit higher than the MarketWatch consensus forecast of 0.3% rise. Americans paid higher prices for gasoline, medical treatment and recreation in October, but overall, inflation remained low and stable. For the year the cost of living rose 1.8%.
Stocks to Watch
Disney DIS, +5.51% shares led the Dow up, gaining 5% after the media giant said its Disney+ streaming service had more than 10 million sign-ups already.
Shares of Canada Goose GOOS, -12.40% surged after beating earnings but then sank on a poor outlook.
Nike NKE, +1.80% will stop selling sneakers and apparel directly on Amazon.com Inc., AMZN, -1.43% the sportswear giant said.
Newspaper publisher McClatchy Co. MNI, -15.71% saw shares tumble more than 15% after a third-quarter loss and comments about a “liquidity challenge.”
An earnings report is expected after the bell Wednesday from tech heavyweight Cisco CSCO, +0.33%.
What are other markets doing?
December gold GCZ19, +0.59% rose $9.60, or 0.7%, to $1,463.30. The ICE U.S. dollar index DXY, +0.06% was virtually unchanged against a basket of currencies.
West Texas Intermediate crude for December delivery CLZ19, +1.13% , was up 0.8%, or 46 cents, to $57.26 a barrel on the New York Mercantile Exchange.
The 10-year U.S. Treasury note TMUBMUSD10Y, -2.30% slipped 3 basis points to 1.89%.
In Asia overnight, the China CSI 000300, -0.09% slipped and Hong Kong’s Hang Seng Index HSI, -1.82% fell 1.8%, while Japan’s Nikkei 225 Index NIK, -0.85% slipped 0.9%.
In Europe, the Stoxx Europe 600 SXXP, -0.26% fell 0.4%.
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