Stocks rally, Treasury yields rise on easing trade fears

NEW YORK (Reuters) – U.S. stocks followed worldwide equities to one-month highs and Treasury yields rose sharply on Thursday as renewed U.S.-China trade optimism and upbeat U.S. economic data stoked risk appetite and lured investors away from safe-haven assets.

FILE PHOTO: Traders work on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., September 3, 2019. REUTERS/Andrew Kelly

The announcement that top negotiators from the United States and China will meet in early October in Washington raised hopes of a possible resolution to the two countries’ brutal trade war that has shaken markets and wreaked havoc on the global economy.

“At some point it behooves both countries to reach an understanding,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco. “The Chinese economy is slowing. They can play the long game but is that in their best interests?”

But Massocca noted that over the last 16 months, good news on the trade front can be undone by a tweet.

“Seems like it’s risk-on, risk-off depending on where trade is day-to-day,” Massocca said. “We’ve seen this movie before and when talks break down you see a flight back to quality and the market correct.”

U.S. private payrolls increased in August at their fastest pace in four months, according to ADP, blowing past analyst estimates ahead of Friday’s more comprehensive jobs report from the Labor Department.

A separate report showed the U.S. services industry rebounded last month to its fastest expansion since February, bouncing back from a three-year low, according to the Institute for Supply Management’s non-manufacturing purchasing managers index (PMI).

Market participants now look to Friday’s closely-watched jobs report and expected remarks from Federal Reserve chair Jerome Powell.

The Dow Jones Industrial Average rose 372.68 points, or 1.41%, to 26,728.15, the S&P 500

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