Wall St ends up as yields, trade optimism rise

VIDEO: REUTERS
Traders work on the floor of the New York Stock Exchange, March 26, 2019.
Traders work on the floor of the New York Stock Exchange, March 26, 2019.PHOTO: REUTERS

NEW YORK (REUTERS) - US stocks climbed on Thursday (March 28) as Treasury yields rose off 15-month lows, with investors optimistic about the latest round of US-China trade talks.

But the day's advance was limited by concerns about economic data. The domestic economy slowed more than initially thought in the fourth quarter, keeping growth in 2018 below the 3 per cent annual target, and corporate profits failed to rise for the first time in more than two years.

Worries about economic growth hit markets last week after the Federal Reserve abandoned projections for any interest rate hikes this year and the US Treasury yield curve inverted for the first time since 2007.

While investors cheered the Fed's move, they are more worried now about a weakening earnings and economic outlook, said Hugh Johnson, chief investment officer of Hugh Johnson Advisors in Albany, New York.

"All of a sudden we've started to examine whether this is the end of the cycle. My answer is, it's not the end of the cycle - for the stock market, the economy - but there's not much left," he said.

Benchmark 10-year yields rose off 15-month lows but the yield curve between three-month bills and 10-year notes remained inverted. If it persists, the inverted yield could indicate that a recession is likely in one to two years.

Senior US officials arrived in Beijing on Thursday for a fresh round of trade talks, which will be followed by a round in Washington next week. Trade-sensitive industrial stocks rose 0.8 per cent and were among the day's top-performing sectors.

On Wednesday, US officials told Reuters China had made unprecedented proposals in talks on a range of issues, including forced technology transfer, as the countries work to overcome the remaining obstacles to a deal to end their trade war.

The Dow Jones Industrial Average rose 91.87 points, or 0.36 per cent, to 25,717.46, the S&P 500 gained 10.07 points, or 0.36 per cent, to 2,815.44 and the Nasdaq Composite added 25.79 points, or 0.34 per cent, to 7,669.17.

Consumer discretionary stocks rose 0.6 per cent, helped by gains in shares of clothing firm PVH Corp.

Calvin Klein's owner forecast full-year adjusted profit and sales above Wall Street's expectations.

Advancing issues outnumbered declining ones on the NYSE by a 1.95-to-1 ratio; on Nasdaq, a 1.81-to-1 ratio favoured advancers.

The S&P 500 posted 27 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 41 new highs and 44 new lows.

Volume on US exchanges was 6.27 billion shares, compared with the 7.54 billion average for the full session over the last 20 trading days.