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The Stock Market has responded positively to Trump’s hint at a possible resolution to the trade war with China. There were modest gains which seem to be unaffected by the current impeachment proceedings against Trump.
As we reported on Wednesday, proceedings for an official impeachment enquiry against U.S. President Donald Trump, was announced by Nancy Pelosi, the Speaker of the House of Representatives, shocking the entire country and the world at large. When this news spread, a lot of people considered what possible effects the situation could have both for the U.S. Stock Market as well as the prolonged trade tensions with China. Now, it would seem that fears have been allayed a bit, as the stock market is currently on a rise.
Possible U.S.-China Deal
Speaking to pressmen at the United Nations in New York on Wednesday, President Donald Trump said that a new trade deal between the two countries could come around much sooner than generally expected. This is a little surprising because for more than a few months now, the two countries have been at loggerheads and have been fighting each other with tariffs on importations and even though negotiations have continued, investors and traders still have a tough time because of ripple effects felt in other parts of the world.
In response to President Trump’s announcement, The Dow Jones Industrial Average (DIJA) increased by 162.94 points to close at 26,970.71, a 0.6% increase. Other indexes were also not left out as the S$P 500 also hit 2,984.87, increasing as well by 0.6% with a 1.1% addition also seen on the Nasdaq Composite Index, pushing it to an 8,077.38 close. The Russell 2000 index also rose 1.1% and closed at 1,550.65, increasing 17.07 points. In general, these indexes are quite close to finishing the 2019 third quarter, with commendable profits.
Tech companies were the highest performers on the S&P 500 with the FAANG companies (Facebook, Amazon, Apple, Netflix and Google (Alphabet), all rising. Facebook (FB) saw an increase of almost 1% with Alphabet (GOOGL), Amazon (AMZN) and Netflix (NFLX) climbing 2.3%, 1.5%, and 4% respectively. Apple (AAPL) also gained 1.5% as well.
Chipmakers Nvidia and Qualcomm were among the biggest jumps, netting 3.3% and 2.7% respectively. Other stocks that rose include Citigroup (2.2%), Wells Fargo (1.3), and Boeing (1.2%). Nike was among the biggest jumpers, closing at 4.2% after hitting a new $92.79 all-time high.
Will The Market Continue To Thrive?
Generally, analysts are of the opinion that even though there is some tension in the political landscape, the effects might not be heavy on the broader market. According to the Chief Investment Strategist at CFRA, Sam Stovall:
“Today, while the current crisis will add to equity market instability, we don’t think it will lead to recession or a new bear market.”
The possibility that the impeachment proceedings will affect the stock market seems to be generally low but might not be completely removed. One of the major troubles President Trump faces is his phone call with Volodymyr Zelensky, the President of Ukraine. During the call, Trump mentions former U.S. Vice President Joe Biden, as well as his son Hunter, seeking some help from Zelensky. According to the released transcript:
“There’s a lot of talk about Biden’s son, that Biden stopped the prosecution and a lot of people want to find out about that, so whatever you can do with the attorney general would be great. Biden went around bragging that he stopped the prosecution, so if you can look into it…It sounds horrible to me.”
As the Trump case edges on, the picture of the stock market as it relates to impeachment might not change. However, it would be wise to expect the unexpected.