NEW YORK (Reuters) – Optimism about a U.S.-China trade agreement has helped drive U.S. stocks to more than two-month highs, creating a make-or-break moment for Wall Street as a year-long clash between the world’s two largest economies comes to a head.
Investors are increasingly hopeful about a positive resolution as a March 1 deadline for trade talks nears. And if the United States and China reach a deal, market professionals say clarity after the lengthy dispute should continue to push shares higher.
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“If we do get a China-U.S. solution and trade agreement, which signs are more positive on that front, that could really propel stocks higher because that would give businesses more confidence in the global economy,” said Chris Gaffney, President of World Markets at TIAA Bank in St. Louis.
A few market watchers even say the benchmark S&P 500 could exceed its all-time closing high set on Sept. 20, which is about 6 percent above Friday’s level.
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That would build on the more than 17 percent surge in the S&P 500 since it hit a 20-month low on Dec. 24, when investors were spooked by Federal Reserve policy as their outlook for earnings and economic growth soured.
But stocks would be vulnerable should talks collapse and the United States hike tariffs to 25 percent on $200 billion of Chinese imports.
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Although investors increasingly believe a more accommodative Fed now provides protection from a drop, some say a significant trade disappointment could send stocks plunging.
“If talks fail and additional tariffs are applied, I do believe stocks could fall through their December 24th lows,” said Kristina Hooper, chief global market strategist at Invesco in New York.
Drumbeat - Trade - Developments - Markets - US
The drumbeat of global trade developments has convulsed markets since U.S. President Donald Trump announced tariffs on steel and aluminum imports a year ago, sparking concerns that a full-blown trade dispute would...
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