Stocks powered higher at the starting bell Wednesday open as global markets rallied and Caterpillar (CAT) led the the Dow Jones industrial average.
XExxon Mobil (XOM) and other petroleum-related stocks rallied as oil prices jumped. Huazhu Group (HTHT) and YY (YY) headed strong early moves among China stocks, as optimism rose regarding U.S.-China trade war negotiations. Other early stock market movers included Salesforce.com (CRM), Broadcom (AVGO) and United Rentals (URI). On the downside, Dave & Buster's (PLAY) tumbled on earnings news, and Verizon (VZ) dropped after an analyst downgrade.
The Nasdaq Composite and Dow Jones industrial average each ran up 1.3%. The S&P 500 opened 1.1% higher.
Early reports of the release on bail of Chinese tech executive facing extradition to the U.S. lifted optimism for progress in U.S. China trade talks. In addition, the Wall Street Journal reported China was preparing to restructure its industrial trade policy, in order to increase access for U.S. companies.
British Prime Minister Theresa May faces a crucial vote today deciding whether she will face a leadership battle. A White House meeting Tuesday pointed to a high probability of a U.S. government shutdown at the end of next week over a budget impasse, never a positive for stock markets. White House and congressional leaders agreed on Dec. 3 to push the budget agreement deadline to Dec. 21.
Dow Jones Trades Tight; Japan, India Markets Soar
The major indexes continue to test their recent lows. The Nasdaq has held up best, while both the S&P 500 and the Dow Jones industrial average cut to new lows before rebounding to finish the day higher.
Both the Dow Jones industrials and the S&P 500 are showing areas of tight trade, right around 24,300 for the Dow and 2,600 for the S&P 500. This attempt to build areas of support could reinforce a floor for the current consolidation. A breakdown of that attempt would open indexes to a potentially much deeper pullback.
Small caps could act as an early indicator. Small-cap indicators are already broken down below support, and continue to hang just a small stumble away from bear-market territory. The S&P Smallcap 600 ended Tuesday 18.5% below its August high, the Russell 2000 was 17.3% off a September peak.
China's stock markets posted uneven gains Wednesday. Hong Kong's Hang Seng index belted out a 1.3% gain, while the Shanghai Composite inched up 0.3%. Markets in Japan and India rallied — Tokyo's Nikkei 225 swelled 2.2% in its strongest session since Nov. 2, and the Bombay Exchange's Sensex jumped 1.8%.
In Europe, markets gained strength ahead of the looming U.K. Parliament vote. The CAC-40 in Paris traded 2.2% higher in afternoon action. London's FTSE 100 gained 1.1%, and Frankfurt's DAX jumped 1.4%.
Oil Prices Surge On Trade, Data; CPI Index Flat
Oil prices jumped on improving trade news, and after the American Petroleum Institute reported a much larger than expected draw on weekly oil inventories. West Texas Intermediate jumped 2% to near $53 a barrel. Europe's Brent crude benchmark rose 1.7%, to above $61. The Energy Information Administration reported weekly oil supply data at 10:30 a.m. ET.
Consumer prices were flat in November, the Labor Department reported. Core prices, minus energy and food, were up 0.2%. Both numbers were in line with consensus projections.
Stocks: Caterpillar, Salesforce, Broadcom
United Rental opened 7% higher, after raising its 2019 revenue guidance and re-launching its $1.25 billion share buyback initiative late Tuesday.
Among Dow Jones stocks, Caterpillar led with a 2.4% gain. Exxon throttled up 1.4%, as oil prices jumped on supply data and U.S.-China trade war news. Exxon rebounded from lows over the past two sessions, looking to build a floor in its three-month consolidation. Shares are down 9.1% for the year, and trading below key levels of support.
Exxon's Dow Jones peer Chevron (CVX) gained 1.1% in early trade.
Salesforce.com climbed 3% in early action, with no obvious news driving the advance. The cloud-based enterprise software leader ended Tuesday a bit less than 8% from a 147.17 buy point in a cup-with-handle base.
Advanced Micro Devices gave up its early gains and slipped 0.7%. AMD has logged a dizzying 94% gain so far this year. But it is looking to crack resistance at its 10-week moving average, in order to start up the right side of a deep, three-month consolidation.
Broadcom popped 3% higher. Aggressive investors my chart the move as a breakout past a 252.24 buy point in an eleven-week cup base. But the base comes with a number of cautions, including that it formed within a year-long consolidation, has been marked by wide-and-loose action, and much of the current pattern formed below 10-week support.
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