US open: Stocks turn green as Trump eyes 'big deal' with Beijing
By Iain Gilbert
Date: Thursday 12 Dec 2019
(Sharecast News) - US stocks opened sharply higher on Thursday after the President said he was "getting very close to a big deal" with China.
As of 1530 GMT, the Dow Jones Industrial Average and the S&P 500 were both up 1.04% at 28,201.58 and 3,174.46, respectively, while the Nasdaq Composite started out the session 1.02% stronger to 8,742.37.
The Dow opened 290.28 points higher on Thursday after seeing out the previous session relatively flat as market participants digested the latest policy announcement from America's central bank. Members of Federal Open Market Committee voted to keep the target range for the Fed funds rate at between 1.5-1.75%, as expected, arguing that the decision was "appropriate" in order to sustain the economic expansion and keep inflation near the committee's 2.0% target.
As far as Thursday was concerned, indices shot into the green after Donald Trump took to Twitter to tell the world that the US and China were "getting very close to a big deal" on trade.
"They want it, and so do we!" Trump said.
Dow Jones cited sources as saying that US negotiators have offered to cut existing tariff rates by up to 50% on $360bn of Chinese imports. It said US negotiators had also offered to cancel new China tariffs that had been due to kick on Sunday.
It was understood that the US would reimpose the original tariff level if China fails to carry out its pledges. Dow Jones said the US made the tariff offer in recent days as both sides strive for a trade deal.
On the data front, the number of Americans filing for unemployment benefits rose more than expected last week, hitting a more than two-year high, according to data from the Labor Department.
US initial jobless claims increased by 49,000 to 252,000, versus expectations for a smaller jump to 213,000. This marked the highest level for claims since 30 September 2017, when it was 257,000.
Elsewhere, US producer prices were unexpectedly flat in November as increases in the price of food and gas were offset by falling services costs - pointing to muted inflation despite a recent uptick in consumer prices.
Economists had forecast the PPI would rise 0.2%.
The Labor Department revealed the flat reading in its producer price index for final demand last month, which followed a 0.4% surge in October. In the 12 months ending November, the PPI gained 1.1% year-on-year, matching October's rise - the smallest increase since October 2016.
In corporate news, Adobe, Costco Wholesale and Sears will all report earnings on Thursday.
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