(Reuters) – U.S. stocks rallied on Tuesday, with the S&P 500 closing in on record levels, as President Donald Trump’s comments on the United States and China restarting trade talks added to optimism over the prospect of a more accommodative Federal Reserve.
FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 17, 2019. REUTERS/Brendan McDermid/File Photo
Trump said he would meet with Chinese President Xi Jinping at the G20 summit later this month, and that trade talks between the two countries would restart after a long lull.
This helped the trade-sensitive industrials jump 1.62%, while technology stocks gained 1.79%, offering the biggest boost to the benchmark index.
Chip companies, which have a sizable revenue exposure to China, led the rally among tech stocks with the Philadelphia Semiconductor index surging 4%.
The U.S. central bank is expected to leave interest rates unchanged at its two-day policy meeting starting Tuesday, but is widely seen as laying the foundation for a cut later this year.
The Fed’s statement at 2 p.m. EDT (1800 GMT) on Wednesday will likely provide insights into the impact of the U.S.-China trade war, President Donald Trump’s calls for a rate cut and weaker economic data on monetary policy.
Hopes of a rate cut have helped the S&P 500 rise 5% this month, putting the benchmark index just 1% away from its all-time high hit in early May.
“A rate cut this week is off the table. But all eyes and ears will be tuned into what the Fed Chairman says about the outlook and how he hints about what is next,” said Steven Skancke, chief economic adviser at wealth management and investment advisory firm Keel Point in Washington.
“The big belief is for a rate cut in September but everyone is looking for a hint that it might come at the next meeting at the end of July.”
Lifting sentiment was ECB President Mario Draghi’s comments indicating a possibility of new rate cuts or asset purchases.
At 10:07 a.m. ET, the Dow Jones Industrial Average was up 316.31 points, or 1.21%, at 26,428.84, the S&P 500 was up 33.71 points, or 1.17%, at 2,923.38.
The Nasdaq Composite was up 139.36 points, or 1.78%, at 7,984.39.
Large-cap volatile favorites such as Facebook Inc, Apple Inc, Amazon.com Inc, Microsoft Corp all rose between 1% and 2%, offering the biggest boost to the Nasdaq.
Facebook climbed 1.34% after it revealed plans to launch a cryptocurrency called Libra, the latest development in its effort to expand beyond social networking and move into e-commerce and global payments.
Advancing issues outnumbered decliners by a 6.38-to-1 ratio on the NYSE and by a 4.43-to-1 ratio on the Nasdaq.
The S&P index recorded 49 new 52-week highs and no new low, while the Nasdaq recorded 59 new highs and 17 new lows.
Reporting by Shreyashi Sanyal and Aparajita Saxena in Bengaluru; Editing by Sriraj Kalluvila