U.S. equities got back to their winning ways, rallying on renewed trade optimism following news that China reported that it and the U.S. have reached an agreement to rollback tariffs in phases. The news came after yesterday’s reports that a U.S.-China trade deal signing may be delayed, which pressured the markets. Earnings continued to roll in, with Qualcomm and Ralph Lauren rising on their results, but Expedia fell after missing earnings forecasts. Treasury yields rallied and the U.S. dollar was higher on the trade news. On the economic front, jobless claims fell more than expected and consumer credit expanded by a smaller-than-expected amount. Meanwhile, crude oil prices rose and gold tumbled.

The Dow Jones Industrial Average (DJIA) advanced 182 points (0.7%) to 27,675, the S&P 500 Index moved 8 points (0.3%) higher to 3,085 and the Nasdaq Composite gained 24 points (0.3%) to 8,435. In heavy volume, 967 million shares were traded on the NYSE and 2.3 billion shares changed hands on the Nasdaq. WTI crude oil increased $0.80 to $57.15 per barrel and wholesale gasoline was up $0.01 at $1.64 per gallon. Elsewhere, the Bloomberg gold spot price fell $22.08 to $1,468.49 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—rose 0.2% to 98.15.

Weekly initial jobless claims declined by 8,000 to 211,000, versus the Bloomberg estimate of 215,000, with the prior week’s figure being revised higher by 1,000 to 219,000. The four-week moving average rose by 250 to 215,250, while continuing claims declined by 3,000 to 1,689,000, north of estimates of 1,682,000.

Consumer credit, released in the final hour of trading, showed consumer borrowing expanded by $9.5 billion during September, well short of the $15.0 billion forecast of economists polled by Bloomberg, while August’s figure was adjusted downward to an increase of $17.8 billion from the originally reported $17.9 billion. Non-revolving debt, which includes student loans and loans for vehicles and mobile homes, rose $10.6 billion, a 4.2% increase year-over-year (y/y), while revolving debt, which includes credit cards, fell by $1.1 billion, a 1.2% y/y decline.

The employment front has been a major factor in helping counter concerns about the global manufacturing recession spilling over to the strong consumer/services side of the economy.  Treasuries fell, partly attributed to increased trade optimism, as the yield on the 2-year note rose 8 basis points (bps) to 1.68%, while the yields on the 10-year note and the 30-year bond advanced 11 bps to 1.92% and 2.40%, respectively.

©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.