U.S. Stocks Extend Rally On Trade Talks News, Upbeat Data

(RTTNews) - Following the significant rebound seen in the previous session, stocks showed another strong move to the upside during trading on Thursday. With the continued advance, the major averages ended the session at their best closing levels in over a month.

The major averages ended the day off their highs of the session but still firmly in positive territory. The Dow surged up 372.68 points or 1.4 percent to 26,728.15, the Nasdaq spiked 139.95 points or 1.8 percent to 8,116.83 and the S&P 500 jumped 38.22 points or 1.3 percent to 2,976.00.

The rally on Wall Street partly reflected a positive reaction to news that the U.S. and China plan to hold high level trade talks in early October.

A statement from China's Commerce Ministry said both sides agreed to the new round of talks during a phone call between Chinese Vice Premier and chief trade negotiator Liu He and U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

"Both sides agreed they should work together and take practical actions to create favorable conditions for the negotiations," China's Commerce Ministry said, according to a CNBC translation.

A spokesperson for the U.S. Trade Representative's office confirmed the phone call and said the U.S. and China agreed to hold meetings "in the coming weeks."

U.S. and Chinese officials will purportedly hold deputy-level talks later this month in preparation for the meeting in October.

A report from payroll processor ADP showing stronger than expected private sector job growth in August also generated buying interest.

The report said private sector employment surged up by 195,000 jobs in August after climbing by a downwardly revised 142,000 jobs in July.

Economists had expected employment to increase by about 149,000 jobs compared to the addition of 156,000 jobs originally reported for the previous month.

"Businesses are holding firm on their payrolls despite the slowing economy," said Mark Zandi, chief economist of Moody's Analytics. "Hiring has moderated, but layoffs remain low. As long as this continues recession will remain at bay."

On Friday, the Labor Department is scheduled to release its more closely watched monthly jobs report, which includes both public and private sector jobs.

Employment is expected to increase by 158,000 jobs in August after climbing by 164,000 jobs in July, while the unemployment rate is expected to hold at 3.7 percent.

Shortly after the start of trading, the Institute for Supply Management released a separate report showing a notable acceleration in the pace of growth in U.S. service sector activity in the month of August.

The ISM said its non-manufacturing index climbed to 56.4 in August after falling to 53.7 in July, with a reading above 50 indicating growth in service sector activity. Economists had expected the index to inch up to 54.0.

The bigger than expected increase by the non-manufacturing index came after it dropped to its lowest level since August of 2016 in the previous month.

Sector News

Oil service stocks turned in some of the market's best performances on the day, driving the Philadelphia Oil Service Index up by 4.1 percent to its best closing level in nearly a month.

The rally by oil service stocks came even though the price of crude oil pulled back near the unchanged after moving sharply higher early in the session.

Substantial strength was also visible among semiconductor stocks, as reflected by the 3.1 percent jump by the Philadelphia Semiconductor Index.

Financial, transportation, computer hardware and steel stocks also saw considerable strength on the day, reflecting broad-based buying interest.

Meanwhile, gold stocks were among the few groups to buck the uptrend, with a steep drop by the price of the precious metal weighing on the sectors.

With gold for December delivery plummeting $34.90 to $1,525.50 an ounce, the NYSE Arca Gold Bugs Index plunged by 4.9 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index surged up by 2.1 percent, while China's Shanghai Composite Index jumped by 1 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index slid by 0.6 percent, the German DAX Index advanced 0.9 percent and the French CAC 40 Index jumped by 1.1 percent.

In the bond market, treasuries showed a steep drop after ending the previous session roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, shot up by 10.6 basis points to 1.565 percent.

Looking Ahead

While the monthly jobs report is likely to be in the spotlight on Friday, traders are also likely to keep an eye on remarks by Federal Reserve Chairman Jerome Powell.