Today investors finally got off the fence and bet big on the market pushing the Dow up 353 points. The trigger is allegedly Trump’s remarks that he will restart trade talks with China.  But we’ve heard this before and, as noted, there have been repeated rallies and retreats based on Trump’s progress or lack thereof.  This prompted today’s expert to say, “I’d wait for the G20 meeting to see actual discussion” about the trade talks.  Tomorrow the Fed is widely expected to change nothing but lay a foundation for rate cuts later this year.  It is the hope of cuts that has now propelled the S&P forward 6% in June.  The Q2 forecast has today changed dramatically from April when 2.8% growth was predicted; now the estimate is a mere 0.2%. But this happened in Q1 too with an initial forecast of -2% and it turned out closer to +2%.  So let’s take these forecasts with a gigantic grain of salt and we’ll just see.  Volume was slightly above the 4-week average at 7 billion. 

tue  JUNE 18, 2019 / 5:23 pm 

Wall Street nears record as mood on trade again turns optimistic

Noel Randewich

DJ:  26,465.54  +353.01       NAS:  7,953.88  +108.86       S&P:  2,917.75  +28.08     6/18

(Reuters) - Wall Street surged on Tuesday and the S&P 500 approached a record high after Washington rekindled trade talks with Beijing, boosting sentiment along with growing investor confidence that the Fed will cut interest rates this year.  U.S. President Donald Trump said he would meet with Chinese President Xi Jinping at the G20 summit later this month, and said talks between the two countries would restart after a recent lull.

Global stock markets have rallied and retreated repeatedly in recent months in reaction to comments from Trump about progress - or lack of progress - in negotiating an end to the trade conflict. Trump’s statement on Tuesday pushed trade-sensitive industrials up 1.9% and technology stocks gained 1.7%. Together, they were the biggest boost to the benchmark index.

Chip companies, which have a sizable revenue exposure to China, led the rally in tech stocks, with the Philadelphia Semiconductor index surging 4.3%.  “We can’t discount how big a deal it is for China and the U.S. not to go into a prolonged trade spat. I don’t think we’re out of the woods yet, though,” said King Lip, chief investment strategist at Baker Avenue Asset Management in San Francisco.   “I’d wait for the G20 meeting to see actual discussions coming out of that before we go back into a risk-on mode,” he said.  The U.S.-China trade war and its impact on economic growth have investors increasingly expecting the Federal Reserve will cut rates to preserve the U.S. economic expansion, which would be the longest on record this summer.

The Fed is widely expected to leave interest rates unchanged at its two-day policy meeting that ends Wednesday, while laying the foundation for a cut later this year. The Fed is scheduled to release its statement at 2 p.m. (1800 GMT) on Wednesday and Chairman Jerome Powell will hold a press conference shortly after.  The S&P 500 has gained 6% so far this month, and is only about 1% from the all-time high hit in early May.

The Dow Jones Industrial Average jumped 353.01 to end at 26,465.54 points, while the S&P 500 gained 28.08 to 2,917.75.  The Nasdaq Composite surged 108.86 to 7,953.88.  Comments by European Central Bank President Mario Draghi indicating the possibility of fresh rate cuts or asset purchases also lifted sentiment.

Apple Inc, Amazon.com Inc and Microsoft Corp rose between 0.8% and 2.4%, with the tech triumvirate contributing more than any other stocks to increases in the S&P 500 and Nasdaq.  Boeing Co jumped 5.4%, buoying the Dow, after the planemaker received an order for its 737 MAX jets valued at more than $24 billion at list prices; the 737 MAX has been grounded since March after two deadly crashes.  The utilities, real estate and consumer staples sectors, all of which are viewed as defensive, were the only decliners.

With about two weeks left in the second quarter, analysts on average expect second-quarter S&P 500 earnings per share to increase by 0.2%, according to IBES data from Refinitiv. In early April, that estimate stood at 2.8% growth.  The S&P 500 posted 57 new 52-week highs and 1 new low; the Nasdaq Composite recorded 85 new highs and 46 new lows.

Volume on U.S. exchanges was 7.0 billion shares, compared to the 6.8 billion average for the full session over the last 20 trading days.