Several market movements took place between the US stock markets on Wednesday and the open Thursday. As a result, the Dow Jones Industrial Average and the S&P 500 were both at record highs on Thursday.
This is what investors need to know.
Stock futures climbed Wednesday night after President Donald Trump announced that he would postpone the planned 15-day increase in Chinese goods tariffs as a "gesture of goodwill." The tariffs are set to increase to 30% from 25% on about $ 250 billion of Chinese goods. Finance Secretary Steven Mnuchin told CNBC Thursday morning that the president "could make an appointment at any time" with China, but won't until "it's a good deal."
"The President postponed it because of a request from the Vice Prime Minister," La Mnuchin added. He pointed out that China's Deputy Prime Minister Liu Han made the request because October 1
ECB lowers interest rates
On Thursday morning, the European Central Bank (ECB) announced a cut in deposit rates by 10 basis points to negative 0.5%. The ECB also announced a substantial bond acquisition program of EUR 20 billion per month, as part of its Quantitative Relief Initiative (QE). Initially, the euro fell to its lowest level against the dollar in nearly two weeks, but later rebounded and set at around $ 1,104, as currency investors remain apprehensive about whether the ECB's policy will increase inflation. In addition, bond yields in the eurozone fell, with Germany's benchmark 10-year bond yields falling to negative 0.64%.
Investors were delighted that the ECB was trying quantitative easing again, hoping that the new program would hit the global economy.
About an hour before the US stock markets opened on Thursday, the labor department reported that consumer prices were slowing last month. The consumer price index, which is used as a measure of inflation, rose only slightly in August. However, the core CPI measurement rose to 2.4% year over year – the highest level since 2008.
The tame inflation was likely to keep the Federal Reserve on track to reduce interest rates next week.
Stock indexes near all-time highs
Both the Dow and the S&P 500 traded Thursday less than 1% below all the highs set in July. Following Thursday's gains, the Dow and S&P 500 were about 0.5% off new records. Dow is looking to surpass a record intraday of 27,398.68, while the S&P 500 finishes its previous record of 3,027.98 points.
Stocks first started trading higher on Thursday, with gains boosted by reports that the Trump administration is considering a temporary trade deal with China. But stocks quickly boosted the gains after a senior White House official denied the report. The official told CNBC that Trump's administration "certainly does not" consider a limited trade transaction to defer or remove tariffs on China.
However, stocks came back again with stocks like Apple and Amazon leading the gain.