S&P 500 Hits Record High After Tariff Rollback Announced

November 8, 2019
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Stock markets soared on Thursday, following news that the U.S. and China had agreed in principle to eliminate tariffs. While a deal is yet to be officially signed, investors are optimistic that negotiations are on the right track.

All major indexes were up at the close on Thursday, extending the record-breaking market rally that has been sustained throughout this year.

How the Indexes Looked at Thursday’s Close

All three mainstream benchmarks recorded positive sessions on Thursday.

  • The S&P 500 Index was up 0.27%, taking year-to-date growth to 23.07%.
  • The NASDAQ Composite was up 0.28%, taking year-to-date growth to 27.12%.
  • The Dow Jones Industrial Average was up 0.66%, taking year-to-date growth to 18.64%.

This is great news for investors who are looking for returns on growth stocks. There has even been some movement in the smaller cap market, helping to spread the returns across the board.

However, the continued growth does create some risk, especially if the tariff cuts and an eventual trade deal fail to materialize.

Reports indicate that there is opposition in Washington to the latest agreement.

China Broke the News on Tariff Rollbacks

The White House and Office of the U.S. Trade Representative have not made any official statements regarding tariff rollbacks. In fact, it was China that released the statement leading to market growth.

Gao Feng, a spokesman for the Chinese Commerce Ministry, said that “Both sides agreed to remove the additional tariffs imposed in phases as progress is made on the agreement. If China and the U.S. reach a phase one deal, both sides should roll back existing additional tariffs in the same proportion simultaneously.”

It is believed that President Trump will hold his plans to add tariffs to $160 billion of Chinese consumer goods in December. There’s also potential that he will lift the tariffs that were implemented in September.

When Will a Deal be Signed?

While there’s a lot of confidence in the stock market today, investors should be cautious and note that no deal has been signed yet. A rollback of tariffs is entirely contingent on a phase one deal being agreed by both parties.

NASDAQ reported on its official website that there was “fierce internal opposition in the White House” to rolling back any tariffs. Officials fear that doing so would eliminate any leverage that the U.S. currently has.

Investors are advised to follow the news closely, as shifting rhetoric could quickly eliminate the confidence that is in the market today. In the meantime, futures are up, and Friday could be another day of growth for the benchmark indexes.

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