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Trade hopes brought new strong growth to Wall Street

Wall Street

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Wall Street stocks ended the trading session on Tuesday with strong growth amid the raising hopes for reaching a trade deal with China after President Donald Trump confirmed that will meet with his counterpart Xi Jinping at the upcoming G20 summit next week. The market sentiment was also positive because of the expectations that the US Federal Reserve will ease monetary policy during the year.

The blue-chip index Dow Jones Industrial Average grew by more than 350 points, or 1.35%, reaching a level of 26,465.54 points, with 3M and Boeing being among the top performers. The broader benchmark S&P 500 added nearly 1% to 2,917.75 points, while the technology Nasdaq Composite rose by 1.4% to 7,953.88 points.

dow jones index

The S&P 500 ended the trading session just 1.2% of its historical high of 2,954.13 points, reached on May 1.

The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 1.30% to 15.15.

Earlier today, Donald Trump said he had “a very good phone call” with Xi Jinping. “We will have an extended meeting next week in the G20 in Japan”, added the US President.

Hope for a US-China trade deal diminished last month after both countries raised tariffs on billions of dollars worth of their goods. Trump also floated the possibility of imposing tariffs on more Chinese imports.

Today’s strong performance of the Wall Street stocks comes amid the two-day meeting of the Federal Open Market Committee, which will discuss the monetary policy of the US. The Fed is expected to leave rates unchanged. However, the investors are expecting signals for a possible future interest rate cut by the end of the year.

The meeting comes after jobs growth and manufacturing activity in May slowed down. This, coupled with lingering worries over US-China trade has led to increasing worries over the global economy.

The Fed’s decision is scheduled to be announced Wednesday at 2 p.m. ET. Fed Chair Jerome Powell will also hold a news conference after the announcement.

The markets were also encouraged by the hints of possible new incentives in Europe. The European Central Bank (ECB) Governor Mario Draghi said in a speech that the ECB could provide new incentives, either by lowering interest rates or purchasing assets if inflation is not accelerating.

On the bonds market, the yield on 10-year and 30-yard US Treasuries declined to 2.056% and 2.547%, respectively.

Corporate stocks performance

The stocks of Boeing and Caterpillar, which both have strong exposure to international trade, rose by 5.4% and 2.4%, respectively. The chipmaker Intel also performed strong, adding 2.69% to its market cap.

The shares of Deere Deere also added 3.25% of its value.

Shares of Snapchat-parent Snap Inc rose nearly 10% after an analyst expressed increased optimism about the technology company’s latest attempts to monetize its platform and drive user growth.

Shares in Senmiao Technology Ltd fell to all-time lows, declining by 42.48%, after entered into a securities purchase agreement with six accredited investors with respect to a registered direct public offering of approximately 6.0 million USD of shares of common stock at a price of 3.38 USD per share.

The stocks of Facebook fell by 0.3% after the social media giant unveiled its cryptocurrency, Libra coin, offering users the ability to make payments on the internet.

The top performers on the S&P 500 were Xilinx Inc (+6.94%), Micron Technology Inc (+5.74%) and Qorvo Inc (+5.56%), while on the flipside were SL Green Realty Corp (-3.46%), Constellation Brands Inc (-2.81%) and Western Union Company (-2.49%).

Corporate earnings reports

American technology-focused defense company Parsons Corporation reported revenue of 904 million USD in the first quarter of 2019, representing an increase of 20% YoY. The company’s net income for the quarter reached 10 million USD, impacted by increased M&A-related intangible amortization expenses and IPO costs. The adjusted EBITDA increased by 43% YoY to 68 million USD with margin increases 120 basis points to 7.5%.

Adobe announced better-than-expected earnings for the second quarter of its 2019 fiscal year, which ended on May 31, and lighter-than-expected guidance. The company’s earnings, excluding certain items, rose to 1.83 USD per share. The revenue reached 2.74 billion USD versus 2.71 billion USD as expected by analysts. Adobe’s largest business segment, Digital Media, which includes the Creative Cloud and Document Cloud products, produced 1.89 billion USD in revenue, up 22% and above the 1.86 billion USD consensus estimate among analysts polled by FactSet. The Digital Experience segment, which contains Magento and Marketo, had revenue of 783.5 million USD, over the FactSet consensus estimate of 777.2 million USD. The Publishing segment contributed 70.6 million USD in revenue, above the 66.1 million USD estimate. In the quarter Adobe reported 7.47 billion USD in annualized recurring revenue for its Digital Media business. That’s above the FactSet consensus of 7.44 billion USD.