Dow futures up over 250 points as China tamps down fears of trade-war escalation


U.S. stock-index futures pointed to a solidly higher start for Wall Street after Beijing indicated it wasn’t in a rush to respond to the latest round of tariffs imposed by Washington.

How are the major benchmarks faring?

Futures on the Dow Jones Industrial Average

YMU19, +0.98%

 were up 266 points, or 1%, at 26,303, while S&P 500 futures

ESU19, +0.92%

 rose 27.7 points, or 1%, to 2,917.5. Nasdaq-100 futures

NQU19, +1.15%

 advanced 91 points, or 1.2%, to 7,689.75.

Stocks appear set to follow on Wednesday’s rebound, when the Dow

DJIA, +1.00%

 rose 258.20 points, or 1%, to close at 26,036.10. The S&P 500

SPX, +0.65%

 advanced 18.78 points, or 0.7%, to end at 2,887.94. The Nasdaq Composite

COMP, +0.38%

 closed at 7,856.88, for a gain of 29.94 points, or 0.4%.

With two sessions left in August, the Dow and S&P 500 were both down 3.1% for month to date through Wednesday, while the Nasdaq was off 3.9%. All three indexes remain higher for the year, with the S&P 500 down around 4.6% from its all-time closing high set in late July, while the Dow is off 4.8% from its record close and the Nasdaq is off 5.7% from its zenith.

What’s driving the market?

A spokesman for China’s commerce ministry was quoted in news reports as saying the country wouldn’t immediately respond to the latest round of tariff increases announced by President Donald Trump on Friday. Those increases came after Beijing announced a round of retaliatory tariffs.

The spokesman, Gao Feng, said “the question that should be discussed now is about removing the new tariffs to prevent escalation.” He also said both sides were discussing a planned meeting next month of trade negotiators.

“The largely hopeful tones of the update from China has lifted market sentiment, and that sparked buying this morning,” said David Madden, market analyst at CMC Markets UK, in a note. “U.S.-China relations have been volatile recently, but for now there is a sense that things are heading in the right direction, and that has coaxed some traders back into the market.”

Investors were also parsing a series of economic reports, including a revision of second-quarter GDP growth that showed the U.S. economy growing at a 2% annual rate rather than the previously reported 2.1%. Economists surveyed by MarketWatch had expected the revision to show 1.9% growth. The revised numbers also showed the U.S. consumer playing an even larger role in economic growth than before, as personal consumption accounted for 3.1 percentage points of growth, versus the initially reported 2.9.

New applications for jobless benefits rose by 4,000 to a seasonally adjusted 215,000 during the week ended Aug. 24, slightly above economist expectations of 214,000, per a MarketWatch poll.

Stocks have pulled back in August in sometimes volatile trade as the U.S.-China trade war escalated with rounds of tit-for-tat tariff escalations and increasingly harsh rhetoric on both sides, which has also been blamed for heightening worries over the global economic outlook and stoking fears of a possible U.S. recession.

Analysts also pointed to calendar as reason for higher equity prices in recent days, as investors rebalance their portfolios heading into September. “There’s a lot of evidence of month-end book squaring, as a lot of the worst performing sectors month-to-date outperformed yesterday, despite the lack of a discernible positive catalyst,” wrote Tom Essaye, president of the Sevens Report, in a Thursday note to clients.

The July goods trade deficit is forecast shrunk to $72.3 billion from $74.2 billion a month earlier, lower than the $75 billion expected by economists polled by MarketWatch. At 10 a.m., a pending home-sales index for July is due.

Which stocks are in focus?

Shares of Best Buy Co. Inc.

BBY, +1.74%

 tumbled 6.4% in premarket action after the retailer reported second-quarter revenue that fell short of analyst expectations, though it beat earnings-per-share forecasts.

Shares of Dollar General Corp.

DG, +1.64%

 were up 8.1% in premarket trade after the discount retailer handily beat analyst estimates for sales and profits in the second quarter, while raising its outlook for the full-year 2019.

Tech Data Corp.’s

TECD, +1.06%

 stock rose 10% ahead of the bell, after reporting fiscal third quarter results.

Shares of Dollar Tree Inc.

DLTR, +2.95%

rose 3.2% before the start of trade, after the retailer beat sales estimates for the second quarter, though it fell short of profit expectations and issued full-year earnings guidance below analyst forecasts.

How are other markets trading?

The yield on the 10-year U.S. Treasury note

TMUBMUSD10Y, +0.00%

 rose 2.6 basis points to 1.49%.

In commodities markets, the price of crude oil

CLV19, +0.59%

rose 0.8% to just above $56 per barrel, while the price of gold

GCZ19, +0.14%

was flat at roughly $1549 per ounce. The value of the U.S. dollar, meanwhile, ticked 0.1% higher, according to the dollar index

DXY, +0.09%.

In Asia overnight, stocks traded mostly lower; the China CSI 300

000300, -0.33%

 fell 0.3%, while the Nikkei 225

NIK, -0.09%

 lost 0.1%. Hong Kong’s Hang Seng Index

HSI, +0.34%,

meanwhile, rose 0.3%.

European stocks were rallying, with the Stoxx Europe 600

SXXP, +0.95%

 up 1%.


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