By Joyce Yu
Philadelphia, PA–U.S. stocks rallied on Thursday, fueled by a string of robust earnings reports and optimism that China will hold talks with the United States later this month. Dow rose more than 400 points or 1.7% during the afternoon session while S&P 500 and Nasdaq had moderate gain of 0.9%-1.0%.
White House economic advisor Larry Kudlow confirmed Sino-US trade talks later this month, but stressed today that President Donald Trump has a strong resolve to make sure the administration gets a good deal. Being rather measured in his optimism about the upcoming negotiations, he said, “Let’s just see what happens.” “Sometimes talks can produce better outcomes than expected.” Kudlow also a trade deal with Mexico is getting close.
“My guess has been that tariffs have been a tactic of the Trump administration” to bring people to the table and negotiate on trade,” Maris Ogg, president of Tower Bridge Advisors spoke with CNBC. “I think getting this resolved before the midterm has become an imperative to remove that cloud of uncertainty from the market.”
Industrial plays rose on hopes that the on-going trade war between China and the US will be resolved. Shares of trade-sensitive companies Boeing gained 3.2% and Caterpillar grew 2.1%. “Markets are looking for a rebound after Wednesday’s sell-off on news of U.S. and China resuming talks,” Peter Cardillo, chief market economist at Spartan Capital Securities in New York, told CNBC. “Any hopes of some sort of an agreement would relieve worries of a trade war and the markets would be able to focus on the macro news and earnings.”
What’s really driving the Dow today is upbeat earnings from Walmart which delivered its best US sales growth in more than a decade, with digital sales surging 40%. Growth in grocery sales was noteworthy. The company plans to continue to “aggressively roll out grocery pickup and delivery in the US.” Moody’s O’Shea said Walmart’s food business “continues as a bright spot, with rapid rollout of in-store pickup well underway, and product delivery expanding as well.”
Before this report, some analysts were not big fans of Walmart, citing its numerous digital operations, including Jet, ModCloth and Moosejaw as well as Walmart.com, were starting to slow. But the latest set of earnings may put those fears to rest. Raising its outlook for the year, Walmart saw its overall sales at US stores open at least a year rose 4.5%. The stocks rose nearly 10% on Thursday.
This has boosted confidence especially after disappointing sales from Macy’s on Wednesday. JCPenney was also punished after reporting a bigger than expected loss. Its shares plunged 25% to below $2 a share on Thursday.
