- Stocks rise as Micron leads strong gains in tech.
- Investors brace for levies on $34 billion in Chinese-made goods to take effect on Friday, with Beijing expected to respond with its own levies on U.S. goods.
- “As he ratchets up the trade conflict with China, President Trump’s protectionism will inevitably start to damage the global economy,” one strategist says.
Stocks closed higher on Thursday as technology shares rose, but investors remained on edge as the U.S. prepared to slap tariffs on goods imported from China.
The Dow Jones Industrial Average rose 181.92 points to 24,356.74, with Intel and Walgreens Boots Alliance outperforming. The gained 0.9 percent to close at 2,736.61 as tech climbed 1.5 percent. The Nasdaq composite advanced 1.1 percent to 7,586.43 as Facebook, Amazon, Netflix and Google-parent Alphabet all rose.
The U.S. is expected to activate levies on $34 billion in Chinese-made goods on Friday, with Beijing expected to respond with its own levies on U.S. goods.
“As he ratchets up the trade conflict with China, President Trump’s protectionism will inevitably start to damage the global economy,” said Dario Perkins, managing director at TS Lombard. “Markets are understandably skittish and a protracted period of tension could both undermine the macro outlook and produce a much nastier endgame.”
Trade tensions have kept a lid on equity gains recently as investors fret over the tariffs' impact on corporate profits and the broader global economy.
Sentiment around trade was lifted slightly after Reuters reported that the U.S. ambassador to Germany told industry executives that President Donald Trump could hold off on implementing tariffs on European cars in exchange for concessions. General Motors shares rose as much as 2.6 percent before closing 1.3 percent higher. Fiat Chrysler also rose 6 percent.
Jeremy Klein, chief market strategist at FBN Securities, said he thinks the market has likely already priced in all the negative news regarding U.S. trade. "Any news we get on trade in the short term will be neutral or good," he said. "We already know all the bad news that's out there on this issue."
Tech shares jumped on Thursday, as Micron climbed 2.6 percent. The company confirmed China , but noted the situation will only have a minor impact on its revenue.
The Federal Reserve released a summary of its most-recent meeting. The summary showed the central bank was worried that letting the economy run too strong could lead to a "significant economic downturn." At the last meeting in June, the Fed increased its benchmark short-term interest rate by a quarter percentage point. In addition, the central bank signaled that two more rate hikes were expected to occur by year-end.
"The Fed would like to get off its accomdative stance and the economic data is really starting to support that," said Stephen Lee, managing principal at Logan Capital Management.
The minutes were released after data from ADP and Moody's Analytics showed jobs grew by 177,000 in June, missing expectations. Jobs growth for May was revised higher, however.
Weekly jobless claims rose unexpectedly last week to 231,000, but the overall trend still suggests a tightening labor market. The data were released ahead of the government's monthly payrolls report, which is due Friday.