U.S. stocks bounced back this week after a nasty October. And while experts have cited a number of factors behind the resurgence in equities—including stocks being oversold and a strong economic backdrop—it would appear that one key narrative has helped to drive stocks toward a four-day rally: developments around the U.S.-China trade skirmish.
As the chart above highlights, upbeat tariff talks between Washington and Beijing have had a singular effect on stocks, highlighted most recently by a recent uptrend that has added more than 900 points to the Dow Jones Industrial Average DJIA, -0.44% since Monday’s ugly start to the week.
Thus far, four notable developments have injected a fresh dollop of optimism on Wall Street:
A late Monday interview with Donald Trump and Fox News where the president said “he will make a great deal with China” President Donald Trump’s top economic adviser, Larry Kudlow, on Wednesday said “nothing is set in stone,” referencing a Bloomberg reported that suggested the administration would impose tariffs on all China imports On Thursday, Trump tweeted that he had a good conversation with China President Xi Jinping Bloomberg reported on Friday that Trump had drafted a U.S.-China trade pact ahead of a late-November summit CNBC reported that a trade deal was far off, refuting Bloomberg’s report
Check out this tweet from CNBC’s Eamon Javers:
NEW: A senior administration official tells me that the report president Trump is ready to cut a trade deal with China is not true. “There is a long way to go” on negotiations, the official said.
— Eamon Javers (@EamonJavers) November 2, 2018
Other market participants were throwing more cold