Trade Optimism Powers Wall Street To Record High: 5 Winners

Both the United States and China have recently agreed on phase-one of the trade deal. Such fresh optimism over trade helped major benchmarks hit record highs on Nov 4. Thus, investors might be interested in stocks that are set to make the most of the bullish scenario.

U.S.-China Trade Resolution

Both U.S. and Chinese officials are looking to cut a few tariffs to finalize the partial trade deal. The countries have agreed to settle the trade dispute, which has affected billions of dollars of trade, squeezed corporate profit margins and impeded global economic growth.

Manufacturing has especially been affected while business investments have also taken a hit. The Fed has also acknowledged weakness in business investments and exports.

According to Myron Brilliant, executive vice president and head of international affairs at the U.S. Chamber of Commerce, “the two sides are nonetheless really close to a deal but it will come down to the presidents to make the final call.” U.S. Commerce Secretary Wilbur Ross, in the meantime, said that the world’s largest economies are making “”good progress” on the U.S.-China trade front.

The so-called phase-one agreement would entail China’s purchase of $40-$50 billion of U.S. agricultural commodities. It will also discourage China from devaluing its currency and protect intellectual property rights.

If the phase-one deal is successful, President Trump won’t impose new tariffs on Dec 15 as planned and officials would roll back some of the existing tariffs. The Financial Times, by the way, has reported that the Trump administration was considering trimming tariffs on nearly $11-billion Chinese goods imposed on Sep 1.

Lest we forget, retailers and apparel producers had expressed disapproval of such tariffs some time back. What’s more, many economists criticized the tariffs imposed on Sep 1 as they directly affect the price of imported consumer products.

Rolling back of such tariffs could easily improve the rapport between both the sides, eventually leading them to pursue a phase-two or phase-three deal.

Stocks at Record Highs

Hopes of at least a partial U.S.-China trade deal helped the stock market scale higher. The Dow Jones Industrial Average rose 114.75 points, or 0.4%, to 27462.11 on Nov 4, notching its first record since July.

The S&P 500 index gained 11.36 points, or 0.4%, to end at 3,078.27, while the Nasdaq rose 46.80 points, or 0.6%, to close at 8,432.20. Both the major bourses finished at record highs for the second consecutive session.

All three primary indexes, in fact, hit an all-time intraday high. The last time the indexes closed at record highs on the same day was Jul 15, per Dow Jones Market Data. But why just U.S. indexes, stocks around the world scaled north as well. Stoxx Europe 600 was up 1%, Hong Kong’s Hang Seng ended 1.6% up and South Korea’s Kospi rose 1.4%, to name a few.

5 Best Growth Stocks to Buy

With the global stock markets gaining traction on trade optimism, astute investors should cash in on this bullish trend by investing in stocks that have immense growth potential. Lest we forget, better-than-expected October jobs report coupled with upbeat third-quarter earnings have buoyed sentiments on Wall Street.

We have used the Zacks Investment Research

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Written By: Zacks Investment Research