Wall Street rallied on Tuesday as investors were heartened by a tentative congressional spending deal to avoid another partial federal government shutdown and by optimism surrounding U.S.-China trade negotiations.
All three major domestic equity indexes posted their largest one-day percentage gains for the month so far, each advancing more than 1 percent. The S&P 500 ended the session above its 200-day moving average for the first time since early December.
Trump said he would be willing to let the March 1 tariff deadline slide as government representatives arrived in Beijing for high-level talks later in the week to hammer out a solution to the trade dispute between the world’s two largest economies.
Congressional negotiators cobbled together a tentative bipartisan border security deal late on Monday to avert another partial government shutdown. Funding for the Department of Homeland Security and a host of other agencies is due to expire on Friday.
The fourth-quarter earnings season is nearing the home stretch, and 71 percent of S&P 500 companies that have reported have beaten consensus estimates.
However, the outlook for 2019, is less ebullient. First-quarter earnings are now expected to post a year-on-year decline of 0.3 percent, which would be the first loss since the earnings recession ended in the second quarter of 2016.
Tuesday’s rally was broad-based. Of the 11 major sectors of the S&P 500, all but real estate closed in positive territory. Technology stocks aided both the S&P 500 and the Nasdaq’s advance.
Tariff-sensitive industrials headed up the Dow’s gain, led by 3M, Caterpillar, United Technologies and Boeing.
Amazon provided the greatest lift to the S&P 500 and the Nasdaq, rising 3.0 percent after Walmart ended its partnership with logistics firm Devi for a rival same-day grocery delivery service.
Electronic Arts announced that its Apex Legends video game has signed up 25 million players in the week since its release, sending its shares up 5.2 percent. The company’s shares are up about 28 percent since the game’s release.
Under Armour rose 6.9 percent after the company exceeded consensus earnings forecasts for the holiday quarter.
Approximately 7.09 billion shares changed hands on the major domestic equity exchanges on Tuesday, as compared to the 7.45 billion share average over the past 20 trading days.
Job Openings at Record High
Job openings rebounded, reaching a record in December as the rate of those leaving jobs held steady, underscoring robust demand for workers.
The number of open positions rose by 169,000 to 7.34 million, from an upwardly revised 7.17 million in the prior month, according to the Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS report, released Tuesday. The quits rate remained at 2.3 percent, indicating confidence that job prospects remain strong.
The record number of open jobs shows employers are still struggling to find workers, with little reprieve in sight. While the latest data are for December, the January jobs report on Feb. 1 showed surprising strength in payrolls and continued wage gains.
The quits rate held steady as 3.48 million Americans left their jobs, the fourth straight decline though still near the record in August. Federal Reserve policy makers watch the rate for signs of upward pressure on worker pay that may feed into inflation.
Job postings exceeded the number of unemployed people by more than 1 million for a third month, though the gap narrowed from the prior month. More job openings than unemployed Americans points to a strong labor market, boding well for worker pay.
Hiring increased to 5.91 million while separations fell to 5.55 million.
Categories showing increases in openings included construction, health care and social assistance, and accommodation and food services.
Although it lags a month behind other Labor Department data, the JOLTS report adds context to monthly employment figures by measuring dynamics such as resignations, help-wanted ads and hiring.
Retail Sales Trend Weakest Since Mid-2016 Says BofA
Spending at retail outlets is on the weakest trajectory in more than two years after unusually cold weather dented sales in January, according to Bank of America research based on credit- and debit-card use by the company’s customers.
If you exclude autos, retail sales fell 0.3 percent in January from the prior month following a little-changed reading in December, with sub-freezing weather that swept across the Midwest playing a key role in the drop and the longest-ever partial government shutdown having less of an impact, according to a report released on Tuesday.
The report comes before Thursday’s release of the Commerce Department’s December’s retail sales figures, which were delayed a month due to the government shutdown.
January’s report has been postponed and yet to be rescheduled. Bank of America projects overall retail sales fell 0.1 percent in December, while the median forecast of economists surveyed by Bloomberg is for a 0.1 percent increase.
The Bank of America analysis is in line with slumping measures of consumer confidence, which fell in January owing to the government shutdown, trade tensions with China and volatility in financial markets.
The University of Michigan’s sentiment index fell to a two-year low while the Conference Board’s confidence gauge declined to an 18-month low.