TheDow Jones enjoyed a rare day of conventional tradingon Tuesday, as corporate earnings for several core Dow stocks pushed the index higher.
Trump’s trade war was mostly out of the headlines asJPMorgan Chase, Johnson & Johnson, andUnitedHealth Groupsent the stock market soaring, defyinga gloomy growth outlook report from the IMF.
Dow Roars Amid Strong Earnings
There was no denying the excellent mood on Wall Street, and all themajor US stock market indices rose by around 1% or more. Minutes before the closing bell, theDow Jones Industrial Averagehad recorded a 260. point or 0. 97% rally to trade at 27, 047. 50.
The Nasdaq was the top performer, leading the Dow Jones and S&P 500 with a 1. 27 % climb to 8, 150. 84.
Despite the positive risk environment, oil prices were subdued, while theprice of golddropped sharplyamid the rally in the Dow.
The British pound exploded higher onhopes for a last-minute trade deal between the UK and EU. ABrexit dealwould be good news for US stocks, as the grim outlook for European growth has been a concern for some time across the Atlantic.
IMF Growth Outlook Forecasts Rocky Road for Dow
As earnings season kicks off in a profoundly positive way for a couple of the Dow’s most significant stocks, a concerning forecast from the IMF has largely been ignored.
Economists expect global growth to slow to the worst level (3.0%) since the financial crisis in 2008, primarily due to rising geopolitical tensions.
Getting ahead of this report, Donald Trump and China appear to be pushing for a de-escalation in the trade war to help support stock market sentiment.
ABN AMRO: Trump Rushed China Deal to Pump Stock Market
Arguing the thesis that Donald Trump’s primary goal in declaring the phase one deal was to get markets moving higher again, senior economistBill Diviney at ABN AMRO warned that it is premature to forecast an end to the trade war, as he wrote:
“Trump already labeling [the agreement] a deal suggests in our view an attempt to support market sentiment. Indeed, nothing has actually yet been agreed in writing. The escalation of trade / tech tensions between the US and China since early 2018 has been a key headwind for global growth… We have seen over the past month some goodwill gestures by both sides suggesting a potential shift in political calculus in both Washington and Beijing. This latest development follows that trend – with hostilities seemingly on hold rather than definitively ending. ”
Withplenty of positive trade war news priced into the Dow, the potential for gains to unwind remains high if the confrontation with China escalates further. Obstacles lurk ahead of the signing ceremony, as China stillwants more tariffs removed before they will sign the deal.
Dow Stocks: UnitedHealth & JPMorgan Chase Lead After Earnings
It was aday of big winners in the Dow 30, asimpressive earnings from UnitedHealth sent the stock soaringa stunning 8.3%.
Risks do remain for this stock , as Tuesday’s Democratic primary debate will feature Elizabeth Warren as a frontrunner for the party’s presidential nomination. Any sign of Joe Biden performing poorly raises the probability of Warren winning the presidential election and pushing her bold plans for healthcare reform.
Johnson & Johnson shrugged off opioid woes toRally 1. 76 *** after its own impressive numbers.
JPMorgan Chase ignored low bond yields topost impressive revenue and hit record highs. Meanwhile, rivalGoldman Sachs underwhelmed with its own earnings report.
Apple stock was notably subdued, with no news to spark any volatility, while Caterpillar appears to bereveling in the more positive relationship between China and the USwith a 2.1% rally.
Lagging the index, Procter & Gamble lost 2.4%, while Nike slipped 0. 05% asLeBron James’ China comments controversyembroiled the company’s top athlete.
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This article was edited byJosiah Wilmoth
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