U.S. equities rallied, adding to yesterday’s gains, as the U.S. and China said they will resume high-level talks early next month in Washington, giving trade optimism a shot in the arm and boosting sentiment. The economic calendar also lent some support, as U.S. services sector growth accelerated more than expected and private sector payrolls reported from ADP showed job creation was higher than forecasts. Treasury yields were solidly higher and crude oil prices modestly added to yesterday’s advance, while the U.S. dollar was little changed and gold came under heavy pressure. In equity news, Palo Alto’s quarterly report pleased the Street, as well as its guidance, while a disappointing outlook from Slack Technologies weighed on its shares.

The Dow Jones Industrial Average (DJIA) rose 373 points (1.4%) to 26,728, the S&P 500 Index advanced 38 points (1.3%) to 2,976, and the Nasdaq Composite jumped 140 points (1.8%) to 8,117. In moderate volume, 877 million shares were traded on the NYSE and 2.1 billion shares changed hands on the Nasdaq. WTI crude oil nudged $0.04 higher to $56.30 per barrel and wholesale gasoline was up $0.02 at $1.55 per gallon. Elsewhere, the Bloomberg gold spot price tumbled $35.07 to $1,517.48 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was nearly unchanged at 98.42.

The August Institute for Supply Management (ISM) non-Manufacturing Index rose to 56.4 from July’s 53.7, and versus the Bloomberg forecast of a modest rise to 54.0, with a reading above 50 denoting expansion. The index came off the lowest level since August 2016 as new orders and business activity both jumped above 60, and growth in prices accelerated, though employment dipped but remained in expansion territory. Non-manufacturing activity accounts for a large majority of U.S. economic output. The ISM said the respondents remain concerned about tariffs and geopolitical uncertainty, but were mostly positive about business conditions.

The final Markit U.S. Services PMI Index for August was revised modestly lower to 50.7 from the preliminary estimate of 50.9, where it was expected to remain, and was below July’s 53.0 level. A reading above 50 denotes expansion. The release is independent and differs from ISM’s report, as it has less historic value and Markit weights its index components differently.

The ADP Employment Change Report showed private sector payrolls rose by 195,000 jobs in August, above forecasts of a 148,000 gain, while July’s increase of 156,000 jobs was revised to a 142,000 rise.

In other employment news, weekly initial jobless claims ticked higher by 1,000 to 217,000, versus estimates of 215,000, with the prior week’s figure being revised higher by 1,000 to 216,000. The four-week moving average increased by 1,500 to 216,250, while continuing claims fell by 39,000 to 1,662,000, south of estimates of 1,688,000.

Treasuries were lower, as yields on the 2-year and 10-year notes rallied 11 basis points (bps) to 1.54% and 1.57%, respectively, while the 30-year bond rate gained 10 bps to 2.05%.

©2019 Charles Schwab & Co., Inc., Member SIPC. All rights reserved.

Schwab Center for Financial Research (“SCFR”) is a division of Charles Schwab & Co., Inc. The information contained herein is obtained from third-party sources and believed to be reliable, but its accuracy or completeness is not guaranteed. This report is for informational purposes only and is not a solicitation, or a recommendation that any particular investor should purchase or sell any particular security. The investment information mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinions are subject to change without notice in reaction to shifting market conditions.