President Donald Trump on Thursday sounded upbeat about China trade talks after a phone call with Chinese President Xi Jinping. Trump's tweet helped boost the Dow Jones, S&P 500 index and Nasdaq composite, which had lost steam after a key manufacturing report pointed to a growing risk that tariffs will hit economic growth.
XTrump tweeted that his "long and very good conversation" with Xi had a "heavy emphasis on Trade" and that "discussions are moving along nicely."
Trump's tweet hit the wires right around the time that the Dow and S&P 500 had turned slightly negative on the stock market today following a positive open. Shortly after, the Dow was 200 points higher. The Dow Jones and S&P 500 index closed up 1.05% while the Nasdaq composite jumped 1.75%.
ISM Manufacturing Index Falls
Before Trump's tweet, a weaker-than-expected national manufacturing report from the Institute for Supply Management drove home the significance of the Trump-Xi talks scheduled later this month in Buenos Aires, Argentina.
The ISM manufacturing survey index slipped to a 6-month low of 57.7, down from September's 59.8 level. The data still signal solid growth, but it was notable deceleration, with Trump tariffs the prime suspect.
China Trade War Impact
"Tariffs Starting to Weigh on Activity" was the headline Jefferies economists slapped on the ISM report. One survey respondent commented, "Mounting pressure due to pending tariffs. Bracing for delays in material from China — a rush of orders trying to race tariff implementation is flooding shipping and customs."
Slowing factory-sector growth comes as the third-quarter GDP report shows that business investment slowed markedly. Business are feeling more cautious due to a potential China trade war escalation. Price hikes related to Trump tariffs already are squeezing profit margins.
The positive vibes Trump offered about China trade talks on Thursday offered Wall Street a welcome change from escalating threats. Bloomberg reported that Trump plans to order new tariffs on the remaining roughly $267 billion in Chinese imports that have yet to be targeted. Up until then, Wall Street had eyed the meeting as the last chance to avoid the automatic increase of Trump tariffs on $200 billion in Chinese imports. Tariffs on those goods are set to jump from 10% to 25% on Jan. 1.
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The post Trump Touts China Trade Talks Progress As Tariffs Hit Manufacturing; Dow Jones Rises appeared first on Investor's Business Daily.
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