Global stocks jumped on positive talk over U.S.-China trade issues on Wednesday, adding to the roller coaster that has defined the markets over the last several weeks.
The Dow Jones industrial average rose 450 points, or 1.9 percent, by early afternoon, with all 11 corporate sectors in positive territory. The boost came on news that China may ease its trade policies and create a more open environment for companies doing business there.
The Standard & Poor’s 500-stock index exited correction territory and was up 1.7 percent. Both the Dow and S&P are up twice in the last three days.
The Dow was lifted by companies that would benefit from U.S.-Chinese trade peace, such as Caterpillar and aerospace giant Boeing. Caterpillar was up 3.25 percent and Boeing was up 2.35 percent. Financial giant Visa, manufacturer 3M and UnitedHealth were also up more than 2 percent.
The S&P was led by the technology and Health care sectors, both of which were up more than 2 percent each on the China news.
The tech-heavy Nasdaq climbed 2.2 percent. It is up nine of the last 12 sessions.
European stocks went higher ahead of a vote of confidence on Prime Minister Theresa May, who Tuesday called off a scheduled vote on Brexit.
Markets were buoyed by reports that China plans to replace its protectionist economic policy with a new plan stressing more openness to foreign companies, according to a report in the Wall Street Journal attributed to “people briefed on the matter.”
The U.S. and European nations have said China must end its requirement that foreign companies hand over their technology and internal corporate secrets as the prices of doing business in the world’s second-largest economy.
Ed Yardeni, president of Yardeni Research, said high-frequency traders and algorithms — what he terms “Dow Vigilantes” — are moving markets dramatically, sniffing out any sign of good or bad news to buy or sell.
The China report played right into that.
“The Chinese are definitely reaching out to the other side of the table, trying to provide some assurances that they are hearing our complaints,” Yardeni said. “It’s probably being leaked by the Trump administration in an effort to stabilize the stock markets. The Dow Vigilantes are getting the attention of the administration. Whenever they are not happy, they send the market spiraling downwards. To try to placate them, the administration is leaking any signs of progress with the Chinese. And it clearly helps.”
Verizon, Procter & Gamble and Coca-Cola were laggards.
Oil prices were also up Wednesday. The weekly inventory report showed a modest drop in crude oil inventories and strong gasoline demand, as drivers hit he road, during the holiday shopping season. OPEC issued its monthly report, which showed big declines in output for Iran and Venezuela last month, which was also supportive.
“The weekly inventory report showed a modest drop in crude oil inventories and strong gasoline demand, as drivers hit the road during the holiday shopping season,” said John Kilduff of Again Capital. “OPEC issued its monthly report, which showed big declines in output for Iran and Venezuela last month, which was also supportive.”