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Stocks - Wall Street Opens Higher After China Wobble

·3-min read

By Geoffrey Smith -- U.S. stock markets opened higher on Tuesday after President Donald Trump moved to dispel concerns about a new trade war between the U.S. and China.

Trump had publicly contradicted his trade advisor Peter Navarro late on Monday after Navarro told Fox News that the phase-one trade deal signed in January, under which the U.S. had suspended many of the import tariffs it had imposed over the previous 18 months, was "over." Trump said via Twitter the deal was "fully intact."

Data from the USDA and others suggest that China has fallen far short of its commitments under the deal to buy U.S. farm goods, as its own economic growth - and demand for commodities - has fallen far short of what it had expected before the coronavirus pandemic. As such, market participants interpreted Trump's intervention as less a statement of fact than an admission that there was no stomach for raising tariffs again - a measure that would hit U.S. consumers' spending power at a time when over 20 million are unemployed.

By 9:45, the Dow Jones Industrial Average was up 275 points, or 1.1% at 26,300, while the S&P 500 and the Nasdaq Composite were both up 0.9%.

There was also better news from the economy: New home sales rose faster than expected in May to 676,000. Meanwhile, IHS Markit's purchasing manager index for June also rebounded more than expected to 49.6 from 39.8 in May. Services in particular rebounded smartly as businesses started to re-emerge from lockdown. As with similar PMIs released earlier in Europe Tuesday, the figures still showed the economy contracting this month - albeit at a slower rate than in May.

Among individual stocks, Apple (NASDAQ:AAPL) stock marched to a new all-time high after the first day of its Worldwide Developers Conference passed off without any major surprises. The company confirmed that it will start using its own chips in the next generation of laptops and Macs. Bank stocks were also in favor, with JPMorgan Chase&Co (NYSE:JPM) stock, Citigroup (NYSE:C) and Bank of America (NYSE:BAC) all rising over 2%.

Elsewhere, American Airlines Group (NASDAQ:AAL) stock fell 5.6% after the company priced its share offering at $13.50 a share, a discount of nearly 10% to Monday's closing price. The issue's pricing was hurt by the company's decision to increase its size to $2 billion from an originally envisaged $1.5 billion.

In other markets,Gold Futures hit an eight-year high as investors continued to price in currency debasement through a likely long period of ultra-low interest rates and asset purchases. By 10:15, gold futures for delivery on the Comex exchange were at $1,783.36, up 1.0% on the day. U.S. Crude Oil futures, meanwhile, hit their highest level since early March on signs that OPEC's crackdown on quota-busting had had some effect. WTI was up 0.7% at $41.00 a barrel.

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