By Chris Matthews, MarketWatch , Sunny Oh
Fed to buy $60 bln Treasury bills per month into 2020
U.S. stocks surged Friday after a report that the U.S. and China
had reached an agreement to ease trade tensions, exchanging
increased agricultural purchases on the part of China for some
relief from U.S. tariffs.
Investors were watching developments closely, as President Trump
is set to meet China's Vice Premier Liu He later Friday.
How did the benchmarks perform?
The Dow Jones Industrial Average rose 432 points, or 1.6%, to
26,928, the S&P 500 index advanced 48 points, or 1.7%, to
2,987, while Nasdaq Composite Index gained 151 points, or 1.9%, to
8,102.
For the week, the Dow is poised to rise 1.4%, while the S&P
500 and Nasdaq are on pace to post 1.2% and 1.5% increases,
respectively.
What drove the stock market?
The U.S. and China have reached a limited agreement to ratchet
down trade tensions Friday, according to a report from Bloomberg
(http://www.marketwatch.com/story/us-china-reach-partial-trade-deal-report-2019-10-11),
which said that the deal will stipulate that "China would agree to
some agricultural concessions and the U.S. would provide some
tariff relief."
The pact was reportedly pending final approval by President
Trump, who was scheduled to meet with China's He Friday
afternoon.
The news was expected by investors after President Donald Trump
tweeted that 'good things are happening
(https://twitter.com/realDonaldTrump/status/1182654371714211840)'
at the trade negotiations.
(http://twitter.com/realDonaldTrump/status/1182654371714211840)
The Wall Street Journal reported
(https://www.wsj.com/articles/trump-to-meet-with-china-s-top-trade-negotiator-on-friday-11570716458?mod=article_inline)that
terms for a possible tentative deal could also include a joint pact
to deter Beijing from devaluing its currency, and, on the U.S.
side, relaxing export bans against blacklisted Chinese telecom
giant Huawei Technologies Co.
(http://www.marketwatch.com/story/trump-says-hell-meet-with-chinese-vice-premier-on-friday-2019-10-10)
China overnight Friday set a timetable for opening its finance
industries
(https://www.apnews.com/3e0a248000c64959abd24916f2de6953). The
China Securities Regulatory Commission said Friday overseas
financial service companies in futures, securities and mutual funds
will be able to apply for total control of onshore ventures
starting in 2020. The move came as the country speeds up its
financial markets opening.
On the data front, University of Michigan's preliminary consumer
sentiment report came in at 96, above economists' estimates for a
reading of 92, according to Econoday. Meanwhile, the import price
index
(http://www.marketwatch.com/story/import-inflation-climbs-in-september-on-higher-cost-of-oil-but-most-prices-still-tame-2019-10-11)climbed
0.2% last month, the government said Friday. The cost of goods
imported into the U.S. rose in September for the first time in four
months, but most of the increase stemmed from higher oil
prices.
Sentiment was also buoyed after the Federal Reserve announced
that it would buy $60 billion of Treasury bills every month
(http://www.marketwatch.com/story/fed-says-it-will-start-to-buy-treasury-bills-next-week-to-ease-money-market-pressure-2019-10-11-1191242)
at least into the second-quarter, starting from next week. The
central bank also said it would conduct overnight repurchase
agreements at least through January of next year in order to reduce
pressures in funding markets.
Meanwhile, investors were parsing a speech by Boston Fed
President Eric Rosengren
(https://www.bostonfed.org/news-and-events/press-releases/2019/statement-of-eric-s-rosengren.aspx)
-- one of three dissenters in the Fed's last decision -- who
continued to emphasize his skepticism of Fed easing, telling an
audience Madison, Wis. that "my view is that policy makers can be
patient and continue to evaluate incoming data before taking
additional action."
Dallas Fed President Robert Kaplan is expected to moderate a
panel in San Francisco at 3 p.m. Kaplan isn't a voting member of
the rate-setting Federal Open Market Committee.
See also: Bank stocks surge as U.S.-China trade hopes lift
Treasury yields
(http://www.marketwatch.com/story/bank-stocks-surge-as-us-china-trade-hopes-lift-treasury-yields-2019-10-11)
Which stocks are in focus?
Shares of Apple Inc.(AAPL) advanced 2.3% as analysts at Wedbush
raised its stock price target to $265 from $245. If the stock
closes above $232.07, it will set a new all-time high.
The stock for Voxx International Corp.(VOXX) fell 1.4% even
after the technology manufacturer reported that its operating
losses fell in the first half of the year.
Shares of Wendy's Co. (WEN) were rallying Friday after the
fast-food retailer announced third-quarter same-store sales that
beat expectations, while raising its dividend.
Shares of Bed Bath & Beyond(BBBY) rose 6.7% after it named
Target Corp.'s(TGT) head of merchandising as its new chief
executive.
How did other assets trade?
The yield on the 10-year U.S. Treasury note
(http://www.marketwatch.com/story/treasury-yields-climb-on-signs-of-progress-towards-us-china-trade-deal-2019-10-11)
climbed to 1.737%, compared with 1.649% on Thursday.
(http://www.marketwatch.com/story/gold-edges-higher-ahead-of-trade-talks-2019-10-09)Gold
futures held below
(http://www.marketwatch.com/story/gold-prices-sink-1-at-low-heading-for-sharpest-weekly-skid-in-nearly-a-year-2019-10-11)
the psychologically significant level at $1,500. December gold was
most recently down 0.9% at $1,487.80 an ounce.
West Texas Intermediate crude for November delivery jumped 93
cents to $54.47 a barrel on the New York Mercantile Exchange, after
an oil tanker attack in the Middle East
(http://www.marketwatch.com/story/oil-prices-jump-after-reports-of-iranian-tanker-blast-2019-10-11).
In Asia overnight Friday, Hong Kong's Hang Seng Index surged
2.3% to 26,308.44, the China CSI 300 rose 1% to reach 3,911.73, and
Japan's Nikkei 225gained 1.2% to 21,798.87. The Stoxx Europe 600,
meanwhile, closed 2.3% higher to 391.61. And the FTSE 100 gained
0.3% to 7,186.36, even as the pound jumped 1.8% against the dollar,
amid renewed Brexit optimism
(http://www.marketwatch.com/story/uk-stocks-drift-before-trade-talks-as-gdp-edges-lower-in-august-2019-10-10).
-- Mark Decambre contributed to this report.
(END) Dow Jones Newswires
October 11, 2019 14:01 ET (18:01 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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