Dow, S&P 500 snap three-day losing streak amid renewed U.S.-China trade-talk optimism

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U.S. stocks closed higher for the first time in four sessions following a report that a phase-one trade U.S.-China trade deal was still in the works, helping to offset fears of a delay sparked a day earlier by President Donald Trump’s remarks.

What did the major benchmarks do?

The Dow Jones Industrial Average DJIA, +0.53% rose 146.97 points, 0.5%, to 27,649.78. The S&P 500 index SPX, +0.63% added 19.56 points, or 0.6%, to close at 3,112.76. The Nasdaq Composite Index  COMP, +0.54% advanced 46.03 points, or 0.5%, to end the session at 8,566.67.

What drove the market?

U.S. stock-index benchmarks recovered some of the week’s lost ground after Bloomberg News, citing sources familiar, reported that Beijing and Washington were making progress toward a phase-one trade pact. The comments also helped to provide a lift to European equities.

Bloomberg’s report said any partial resolution on trade would be complete before another set of China tariffs kick in on Dec. 15. The news comes after stocks broadly slumped on Tuesday following a President Trump news conference in London, where he indicated there was “no deadline” when it comes to concluding the nearly two-year-old U.S.-China trade spat. He made those comments at a NATO meeting.

“While yesterday, the odds of an imminent trade deal seemed slim in the wake of the President’s hawkish words, we got upbeat reports regarding the state of the negotiations overnight,” wrote Ken Berman, strategist at Gorilla Trades, in a note.

“Even though the large-cap benchmarks are still well below last week’s all-time highs, the Volatility Index VIX, -7.27%  plunged back below the 15 level while small-caps are keeping up with the broader market, which both point to healthy risk appetite,” he added.

Read: What a ‘no-deal’ U.S.-China trade scenario would mean for stocks and bonds

Meanwhile, stocks shrugged off a report on U.S. private-sector hiring Wednesday morning. Employers added just 67,000 workers in November, payroll processor ADP said, a much weaker reading than analysts had forecast, made worse by downward revisions to earlier months.

A reading on the service sector of the U.S. economy was mixed: the Institute for Supply Management’s nonmanufacturing index was at 53.9%, lower than in October, but new orders were at 57.1%, up from 55.6% and signaling stronger demand ahead. A similar survey from IHS Markit for the service sector showed an improvement in November though with its index rising to 51.6 in November from 50.6 in October.

What stocks were in focus?

Shares of chipmakers rose with prospects for a U.S. – China trade deal. Nvidia NVDA, +0.85%   shares rose 0.9% and Micron Technology MU, +2.37%   closed 2.4% higher and the PHLX semiconductor index SOX, +1.55%   rose 1.6%.

Alphabet GOOGL, +1.87%   gained 2% after Google’s parent said CEO Larry Page is stepping down and will be replaced by Sundar Pichai, currently CEO of Alphabet’s Google unit.

United Airlines UAL, -0.79%   fell 0.8% after the airline said it will buy 50 new Airbus A321XLR aircraft and begin replacing and retiring its existing fleet of Boeing 757-200 aircraft.

Expedia Group Inc. EXPE, +6.21% shares rallied 6.2% after a reshuffle of top executives over ongoing disagreements over strategy.

Chesapeake Energy Corp. CHK, +16.55%   saw shares surge 16.9% after securing a loan facility meant to buy it time as it hunts for paths to profitability.

Shares of Campbell’s Soup CPB, +1.87% gained 1.9% after reporting better-than-expected quarterly profit and a rise in market share although sales were slightly below forecasts and the company cut its 2020 sales growth outlook.

Salesforce.com CRM, -3.18%   fell 3.2% after the cloud-software company beat Wall Street’s third-quarter earnings expectations, but offered a disappointing outlook.

How did other markets fare?

The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +3.15% rose 6.2 basis points to 1.770% on the swing in hopes for a U.S. – China trade deal.

Oil futures rallied Wednesday after U.S. government data showed the first decline in U.S. inventories in six weeks. Traders also awaited meetings OPEC and its allies set for Thursday and Friday. West Texas Intermediate crude for January delivery CLF22, +1.21%  on the New York Mercantile Exchange rose $2.33, or 4.2%, to settle at $58.43 a barrel.

Gold for February delivery GCG20, -0.27% fell $4.20, or 0.3%, to settle at $1,480.20 an ounce on Comex.

The U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, -0.13%, fell 0.1% at 97.61 against a basket of a half-dozen currency peers.

European stocks closed higher, with the Stoxx Europe SXXP, +1.18% up 1.1%, to 403.19.

In Asia overnight, the Hang Seng HSI, -1.25%  fell 328 points, 1.3%, and the China CSI 000300, -0.03%  ticked down 1.3 points to 3,849.82.

Related: Don’t get so excited, this economist says—the trade news isn’t that good