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.
FTSE 100
Index Chart
From Feb 2024 to Mar 2024 Click Here for more FTSE 100 Charts.
FTSE 100
Index Chart
From Mar 2023 to Mar 2024 Click Here for more FTSE 100 Charts.