Stocks Stage Late Rally as Trade Optimism Wins Out: Markets Wrap

(Bloomberg) -- Stocks closed higher for the first time in five days on renewed optimism that an all-out trade war can be averted even after the U.S. decision to slap fresh tariffs on Chinese goods overnight.

While a late-day push sent the S&P 500 into positive territory, the bellwether still finished down on the week by the most since just before Christmas. Ten of the 11 industry sectors gained after all started the day in the red. U.S. and Chinese officials wrapped up high-level trade talks on Friday, lacking a deal yet avoiding a breakdown in negotiations even after President Donald Trump boosted tariffs on $200 billion in goods and threatened to impose more.

“I believe this is the “end game” for the negotiations,” said Bryce Doty, senior vice president at Sit Investment Associates, which has about $13 billion in assets under management. “Both sides are making a show of resistance as they get closer and closer to a final deal.”

In Asia, the Shanghai benchmark jumped 3.1% as Chinese state-backed funds bought domestic shares. Treasuries continued to benefit as investors sought havens, with the benchmark 10-year note yield ending the week lower. The dollar weakened after a report showed inflation rose less than forecast in April.

Still, with China yet to specify how it will retaliate against U.S. duties, investors stumbled to the end of a bruising few days after seeing almost $600 billion in equity market value wiped out. The U.S. gave its bottom line in talks in Washington, saying Beijing had three to four weeks more to reach an agreement before the Trump administration acts again.

“Everything that people thought was going to happen is now back on the table and dirty laundry is all over the place,” said Yousef Abbasi, director of U.S. institutional equities and global market strategist at INTL FCStone. “That’s the scenario we face.”

Elsewhere, emerging-market currencies strengthened. South Africa’s rand gained as the African National Congress headed toward victory in a national election, and the lira rallied as Turkish banks bought the currency in Asia hours. Bitcoin advanced for a 10th day, the longest winning streak since 2017, the year of its historic leap to almost $20,000.

These are the main moves in markets:

Stocks

• The S&P 500 Index rose 0.4% as of 4:07 p.m. New York time, while the Nasdaq Composite Index slumped 0.1% and the Dow Jones Industrial Average gained 0.4%.
• The Stoxx Europe 600 gained 0.3%.
• The MSCI Emerging Market Index rose 0.6%.
• The MSCI Asia Pacific Index rose 0.2%.

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%.
• The euro rose 0.2% to $1.1233, while the yen strengthened 0.2% to 109.90 per dollar.
• The British pound weakened less than 0.1% to $1.3009.
• The MSCI Emerging Markets Currency Index rose 0.3%.

Bonds

• The yield on 10-year Treasuries rose 2 basis points to 2.46%.
• Germany’s 10-year yield was little changed at negative 0.05%.

Commodities

• West Texas Intermediate fell 0.2% to $61.57 a barrel.
• Gold gained 0.2% to $1,286 an ounce.
• The Bloomberg Commodity Index rose 0.1%.

To contact the reporters on this story: Sarah Ponczek in New York at sponczek2@bloomberg.net;Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka

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