Wall Street rises on trade hopes, chip stocks at record highs
New York`s main stock indexes rose on Wednesday, extending a strong start to the quarter as a rally in chipmakers added to optimism over trade talks between the United States and China.
White House economic adviser Larry Kudlow said on Tuesday that the two countries "expect to make more headway" in trade talks this week, leading to hopes of a resolution to their months-long trade war.
"The trade talks supposedly getting closer to an agreement, are definitely giving a positive lift to Asian and U.S. markets," said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.
"The market believes that`s a good sign and it will be carried throughout the rest of the day."
Chipmakers, which get a large part of their revenue from China, boosted the main U.S. indexes. Advanced Micro Devices Inc jumped 9.1%, becoming the top gainer on the S&P 500. Micron Technology Inc gained 4.5% and Intel Corp rose 1.9%.
Nomura Instinet started coverage of AMD and Intel with "buy" ratings, according to a report, and the brokerage expects a rebound in chip sales from 2020 to 2025 after a 10% decline this year.
The Philadelphia Semiconductor index rose 2.3% to hit a record high, adding to its 24% gain this year on hopes of a trade deal and recovering global demand for chips.
Global growth slowdown fears receded after a report which showed China`s services sector rose to a 14-month high in March, following upbeat manufacturing data from China and the United States earlier in the week.
Stocks gave up some gains after the Institute for Supply Management came out with its March U.S. services sector PMI, which was below estimates, and was at its lowest since August 2017.
Earlier, the ADP National Employment Report showed U.S. private employers added 129,000 jobs in March, below economists` estimates.
At 10:14 a.m. ET, the Dow Jones Industrial Average was up 3.78 points, or 0.01%, at 26,182.91, the S&P 500 was up 7.38 points, or 0.26%, at 2,874.62 and the Nasdaq Composite was up 49.53 points, or 0.63%, at 7,898.21.
The gains put the S&P 500 less than 2% away from a record high hit in September as a dovish Federal Reserve and trade hopes set the stage for a strong start to the quarter.
Seven of the 11 major S&P sectors were higher, with the technology index`s 0.6 percent rise providing the biggest boost.
Checking gains on the Dow, Boeing Co dropped 1.1% after brokerage Baird said it expects Wall Street to lower earnings estimates "considerably" after the company reports delivery numbers next week. The numbers could reflect the 737-MAX groundings following the Ethiopian crash, Baird said.
Caterpillar Inc dropped 0.8% on a report that Deutsche Bank downgraded the company`s stock to a "hold" rating.
GameStop Corp fell 8.5% after the videogame retailer forecast current-quarter profit below analysts` estimates.
Advancing issues outnumbered decliners for a 2.30-to-1 ratio on the NYSE and a 2.13-to-1 ratio on the Nasdaq.
The S&P index recorded 39 new 52-week highs and one new low, while the Nasdaq recorded 59 new highs and 14 new lows.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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