Stocks rise on trade optimism. U.S. stocks are higher this morning amid news that face-to-face trade talks between the U.S. and China will begin on October 7. The U.S. and China have been expected to meet in October, but investors have been skeptical of the meeting after China canceled visits to U.S. farms last week. The S&P 500 Index has hovered near all-time highs recently, but 3,000 has proven to be a difficult level for the benchmark to cross meaningfully.
Yields’ rollercoaster. Investors focused on a stalled stock market missed an exciting two weeks in U.S. Treasuries. The 10-year Treasury yield jumped 34 basis points (0.34%) in the week ending September 13, then gave back half that gain in a 17 basis point (0.17%) slide last week. The benchmark yield hasn’t moved at least 15 basis points (0.15%) in two consecutive weeks since November 2016. On the LPL Research blog, we’ll highlight recent action in yields and why we don’t expect the 10-year yield to move decisively higher in the near-term.
U.S. manufacturing improves. U.S. manufacturing activity has improved recently, according to preliminary Markit Purchasing Managers’ Index (PMI) data. In September, the U.S. Markit PMI gauge rose to 51, its highest level since April. Gains in domestic new orders and output helped push the PMI higher this month, but export orders remained weak. Markit’s gauge of services activity increased 0.2 points, slightly higher than August’s reading but near the lowest level since 2016. Even though we’d like to see more significant improvements in domestic manufacturing (as manufacturing is a bellwether for economic activity and corporate profits), we don’t expect that to happen until trade uncertainty declines.
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