US stocks rally on trade talks, Fed’s ‘flexibility’
NatAlliance global fixed income head Andy Brenner and Harris Financial Group managing partner Jamie Cox on how U.S. stocks surged after Federal Reserve Chairman Jerome Powell signaled that the Fed would be flexible about future monetary policy moves.
Equity futures were mixed as trade talks resume this week between the U.S. and China.
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Dow Jones futures were down by 0.1 percent. The S&P 500 slipped 0.1 percent and the Nasdaq Composite was off 0.1 percent.
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China and the United States want to work together on trade, the Chinese foreign ministry said on Monday.
U.S. officials are meeting their counterparts in Beijing this week for the first face-to-face talks since President Trump and China’s President Xi Jinping agreed in December to a 90-day truce in a trade war that has roiled international markets.
In Asian markets on Monday, the Shanghai Composite closed up 0.7 percent.
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Hong Kong’s Hang Seng finished the day up 0.8 percent.
The Nikkei climbed 2.4 percent on Monday, tracking sharp gains on Wall Street as dovish comments from Jerome Powell and the strong non-farm payroll report.
In European trading, London’s FTSE traded lower by 0.4 percent, Germany’s DAX slipped 0.4 percent and France’s CAC was off 0.4 percent.
| Ticker | Security | Last | Change | %Chg |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 23433.16 | +746.94 | +3.29% |
| SP500 | S&P 500 | 2531.94 | +84.05 | +3.43% |
| I:COMP | NASDAQ COMPOSITE INDEX | 6738.8573 | +275.35 | +4.26% |
Stocks surged on Friday, with the Dow Jones Industrial Average rising 746 points after Federal Reserve Chair Jerome Powell said the central bank is prepared to adjust policy quickly and flexibly. His comments followed a blockbuster jobs report for December which saw annual wages jump the most since 2008.
The Dow’s gain of 3.2 percent is the best performance on a jobs day since 2002, according to the Dow Jones Market Data Group. The S&P 500 also rose over 3 percent and the Nasdaq Composite even more at 4.3 percent.
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Investors took the comments by Powell, who also said the Fed would be patient about raising rates amid conflicting economic signals, as a signal that policymakers may be willing to slow down the planned pace of interest rate hikes this year. The central bank is expected to raise rates twice this year.
Powell’s comments came after the Labor Department reported that U.S. employers created vastly more jobs last month than analysts expected. American employers added 312,000 jobs in December more than the 177,000 estimate. Additionally, wages rose 3.2 percent year-over-year, the best jump in a decade.
