(Reuters) – U.S. stocks gained ground on Wednesday after a report that President Donald Trump was set to delay a decision to impose auto tariffs, offering respite to markets worried about slowing global growth after a batch of weak economic data.
Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 14, 2019. REUTERS/Brendan McDermid
The deadline to decide on tariffs is May 18, but Trump is expected to delay it by up to six months, sources told Reuters. Automakers Ford Motor Co, and General Motors Co gained about 1% on the news.
Meanwhile, Treasury Secretary Steven Mnuchin said he will likely travel to Beijing soon to continue trade talks with China.
“We got some support from Mnuchin comments and then auto tariffs, that is a positive development as there was fear that tariffs would stretch to auto imports,” said Paul Brigandi, managing director of portfolio management at Direxion Funds in New York.
Concerns that the trade dispute could be protracted and may impact the global economy have kept investors on edge over the past couple of days, and has put the benchmark S&P index 3.6% below its all-time high reached two weeks ago.
“The truth is that we are closer to a trade deal than none. Investors around the world want to see a deal happen, they want to see finality,” said Ken Polcari, managing principal at Butcher Joseph Asset Management in New York.
“If the news around trade remains uncertain, the market does not know how to price that in, which is why you see markets thrashing around every time there is headline to drive the tone.”
Stocks came under pressure earlier in the day after U.S. retail sales unexpectedly fell in April as households cut back on purchases of motor vehicles, indicating a moderation in economic activity.
Worries about slowing growth were reinforced by a drop in industrial production last month.
Data from China also showed surprisingly weak growth in retail sales and industrial output for April, adding pressure on the country to roll out more stimulus.
At 12:38 a.m. ET, the Dow Jones Industrial Average was up 119.14 points, or 0.47%, at 25,651.19. The S&P 500 was up 16.28 points, or 0.57%, at 2,850.69 and the Nasdaq Composite was up 73.64 points, or 0.95%, at 7,808.13.
Technology shares gained 0.9%, providing the biggest boost to markets. A more than 2.5% gain in shares of Facebook Inc and Alphabet Inc lifted the communication services sector by 1.3%, the most among the major S&P sectors.
Agilent Technologies Inc’s shares fell 11.9%, the most on the S&P 500, after the medical equipment maker’s quarterly results missed estimates.
Boeing Co rose 0.8% after Federal Aviation Administration acting chief Dan Elwell told lawmakers he expects the planemaker to submit a software fix for the grounded 737 MAX for approval soon, but added he was concerned by Boeing’s lengthy delay in disclosing a software anomaly.
Advancing issues outnumbered decliners by a 1.91-to-1 ratio on the NYSE and by a 1.33-to-1 ratio on the Nasdaq.
The S&P index recorded 21 new 52-week highs and 11 new lows, while the Nasdaq recorded 57 new highs and 58 new lows.
Reporting by Amy Caren Daniel and Sruthi Shankar in Bengaluru; Editing by Shounak Dasgupta and Arun Koyyur