US stocks stage biggest rally since March as tech sector surges, in respite from China trade tensions

The S&P 500 was up more than 2 per cent, and all 30 members of the Dow Jones Industrial Average advanced

PUBLISHED : Wednesday, 17 October, 2018, 4:48am
UPDATED : Wednesday, 17 October, 2018, 5:15am

US stocks gained the most in more than six months as corporate earnings provided a respite from tensions over trade and geopolitics.

The S&P 500 surged more than 2 per cent, all 30 members of the Dow Jones Industrial Average advanced and small caps in the Russell 2000 Index notched the best gain since the day after the 2016 election. The Nasdaq composite index saw its biggest gain since March as UnitedHealth Group bolstered health care firms and Adobe’s forecast lifted software makers. Technology stocks looked set to extend gains in the futures session as Netflix rallied on a surge in net subscribers. IBM fell in late trading as its revenue missed targets.

The dollar held near a two-week low and the 10-year Treasury yield traded around 3.15 per cent as data showed US factory production expanded in September. Oil edged higher amid tensions between the Saudi Arabia and the US over the disappearance and presumed murder of a prominent journalist.

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“The third quarter, which is now underway, would be the first sign if you’re looking for a smoking gun for either tariffs or tightening conditions,” Jurrien Timmer, director of global macro at Fidelity Investments, said by phone. “People at this point want to be relieved or are feeling that things aren’t as bad as last week suggested.”

Better results at the start of earnings season are giving many investors breathing room from concerns that a slowdown could be on the horizon. Netflix becomes the first large technology company to report after today’s close, while minutes from the latest Fed meeting should offer more clues a day later. In the background, traders are still grappling with continuing US-China trade war rhetoric and geopolitical strains.

Elsewhere, the pound climbed as leaders struck a conciliatory tone a day after Brexit negotiations broke down. The Turkish lira rose after seven days of gains after the country released US pastor Andrew Brunson on Friday.