Market Snapshot: Dow set for nearly 200-point gain as inflation report points to highest yearly rate in 6 years

Market Snapshot: Dow set for nearly 200-point gain as inflation report points to highest yearly rate in 6 years

U.S. stocks looked poised to rebound early Thursday, resuming a recent uptrend that had been interrupted on Wednesday by a fresh intensification of trade and political disputes between Washington and the rest of the developed world. However, upbeat data and signs that the U.S. and China, the two biggest economies in the world, are open to resolving their differences has helped to refresh some appetite for assets perceived as risky.

What are markets doing?

Futures for the Dow Jones Industrial Average YMU8, +0.82%  rose 196 points, or 0.8%, to 24,884, while those for the S&P 500 index ESU8, +0.57%  gained 15.90 points, or 0.6%, to 2,790. Futures for the Nasdaq-100 index NQU8, +0.57%  rose 43.50, 0.6%, to 7,297.25.

The premarket gains come after a selloff on Wednesday, when U.S. stocks snapped a four-session winning streak as the Trump administration announced plans to impose another round of tariffs on Chinese goods. The Dow DJIA, -0.88% ended 0.9% lower, while the S&P SPX, -0.71%  fell 0.7% and the Nasdaq Composite Index COMP, -0.55%  shed 0.6%.

What is driving the market?

The trading mood on Thursday morning may have been getting a boost from signs the U.S. and China are willing to resume trade talks, which could end up in a bilateral agreement. Bloomberg reported late Wednesday that officials from both countries have raised the prospects of restarting a conversation at a high level.

Fears of a full-blown trade war possibly developing between the world’s two largest economies have weighed on equities around the globe in recent months, although analysts have pointed out that markets have remained somewhat resilient.

Meanwhile, the U.S. consumer-price index increased 0.1% in June. Core CPI, minus volatile food and energy, rose 0.2% on the month. Moreover, the 12-month gain for CPI rose to a 6-yr high of 2.9%, reflecting a U.S. economy that is running hotter than anytime since the 2007-09 recession.

A reading of weekly initial jobless claims showed a fall of 18,000 to 214,000 in first week of July, back toward the lowest levels in almost 50 years.

Economists polled by MarketWatch expect consumer prices to have risen 0.2% month-on-month in June.

A strong reading could further strengthen speculation the Fed will raise rates two more times this year, bringing the total to four hikes in 2018.

What are strategists saying?

“U.S. futures and European markets are trading higher on the back of the hopes that the trade talks between China and the U.S. would resume soon at a higher level,” said Naeem Aslam, chief market analyst at Think Markets, in a note.

“The hope is that China and U.S. would be able to resolve this matter through bilateral agreement. But uncertainty around this matter has anchored up. The sad aspect is none of the parties are ready to throw in the towel yet, which makes me think that there is no resolution in sight,” he added.

What’s on the economic calendar?

At 10:30 a.m. Eastern, Philadelphia Fed President Patrick Harker is due to take part in a discussion at an event in Idaho, and the Treasury Department is slated release its June figures on the federal budget for June at 2 p.m. Eastern.

See: MarketWatch’s Economic Calendar

Stock movers

Shares in software company CA Inc. CA, +0.16%  rallied 16% in premarket trade after chip giant Broadcom Inc. AVGO, -2.84%  confirmed late Wednesday it has agreed to take over the software company for $44.50 a share. Broadcom shares were down 6.5%.

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