Markets closed in positive territory on Tuesday after the trade war rhetoric between the United States and China cooled slightly. Encouraging comments from Trump also supported gains for the broader markets. The three major benchmarks ended in the green.
The Dow Jones Industrial Average (DJI) increased 0.8%, to close at 25,532.05. The S&P 500 increased 0.8% to close at 2,834.41. The tech-laden Nasdaq Composite Index closed at 7,734.49, gaining1.1%. The fear-gauge CBOE Volatility Index (VIX) decreased 11% to close at 18.30. Advancers outnumbered decliners on the NYSE by a 3.70-to-1 ratio. On Nasdaq, a 2.74-to-1 ratio favored advancing issues.
How Did the Benchmarks Perform?
The Dow amassed 207.1 points to close in the green. Gains for the 30-stock index were broad-based and supported by a rally in the shares of Visa (V – Free Report) and Boeing (BA – Free Report) , which gained 1.8% and 1.7%, respectively. Both the stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 added 22.5 points to end in positive territory. The broader index rallied on the back of broad-based gains for the tech stocks. Of the 11 major sectors of the S&P 500, 10 ended in green, with technology leading the advancers. The Technology Select Sector SPDR Fund (XLK)increased 1.6% on Tuesday.
Meanwhile, the Nasdaq rallied 87.5 points to close in the green. Shares of Microsoft (MSFT – Free Report) and Apple (AAPL – Free Report) gained1.1% and 1.6%, respectively and supported gains for the Nasdaq.
Trump’s Comments Boosts Markets
China’s announcement on May 13 that it would retaliate by increasing increase tariffs on about 5,000 U.S. products to 25%, had rattled the stock markets. However, reassuring comments from President Trump boosted investor sentiment.
Late on Monday, Trump stated that it would become clear within the coming “three or four weeks” how successful the latest U.S. trade delegation’s trip was to China. He went on to say that he had a “feeling it’s going to be very successful.”
Despite widespread speculation that America’s trade war with China would hurt U.S. farmers the most, Trump remains confident that they stand to benefit greatly from tariffs on Chinese products. In a tweet on Tuesday morning, the President stressed this fact and also stated that U.S. farmers “have been forgotten for many years. Their time is now!”
Meanwhile, Trump also pressed the Federal Reserve to lower benchmark interest rates in another tweet on May 14. He stated that such a move would not only boost the economy but also cushion the United States against the effects of trade tensions. Such comments boosted gains for the markets.
On the economic data front, NFIB’s Small Business Optimism index increased 1.7 points to 103.5 points, a four-month high. Meanwhile, U.S. import price index rose 0.2% in April, below the consensus estimate of 0.7%. Also, the export price index increased 0.3%, coming in below the consensus estimate of 0.5%.
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