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Wall Street rallies on trade optimism, hopes of avoiding government shutdown

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(Reuters) – Wall Street’s main indexes extended gains on Tuesday, in a broad-based rally after American lawmakers reached a tentative deal to avoid another partial government shutdown and on hopes of an agreement during the ongoing U.S.-China trade talks.

A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., February 8, 2019. REUTERS/Brendan McDermid

President Donald Trump comments that he did not anticipate another government shutdown added to sentiment, even though he expressed unhappiness about the agreement that includes funds for U.S.-Mexican border security but not for his promised wall.

The S&P 500 index crossed its 200-day moving average price on Tuesday, a technical level that indicates long-term momentum, for the first time since Dec. 4.

The benchmark index is now just about 7 percent away from its Sept. 20 record closing high, boosted by an upbeat fourth-quarter earnings season, a dovish Federal Reserve and trade optimism.

“The fact that lawmakers want to leave the government open sounds like one of the biggest drivers for markets today,” said Gary Bradshaw, portfolio manager with Hodges Funds in Dallas.

“Investors like that fact that we are getting closer to trade issues improving. They are taking a risk-on stance, everyone is buying today.”

Top U.S. officials arrived in the Chinese capital on Tuesday for high-level trade talks as the world’s two largest economies attempt to strike a deal before a March 1 deadline and avoid another escalation of tariffs.

Trump said he would consider pushing the deadline if the two sides were close to a deal.

Trade-sensitive industrials climbed 1.52 percent, boosted by Boeing Inc and Caterpillar Inc.

Chipmakers, which depend on China for a huge chunk of their revenue, also rose and pushed the Philadelphia chip index 1.92 percent higher.

The broader technology sector rose 1.28 percent, lifted by gains in Apple Inc, Microsoft Corp and Intel Corp.

Amazon.com Inc rose 2.24 percent and was the biggest boost to the S&P 500 and Nasdaq.

In the latest data underscoring the economy’s strength, U.S. job openings surged to a record high in December.

At 12:41 p.m. ET, the Dow Jones Industrial Average was up 337.49 points, or 1.35 percent, at 25,390.60. The S&P 500 was up 32.98 points, or 1.22 percent, at 2,742.78 and the Nasdaq Composite was up 96.36 points, or 1.32 percent, at 7,404.27.

Eight of the 10 major sectors trading higher posted gains of more than 1 percent. Only the real estate sector was trading lower.

About 71 percent of the S&P companies that have posted earnings have topped expectations, according to IBES data from Refinitiv. But analysts’ estimates for first-quarter earnings have turned negative for the first time since 2016.

Electronic Arts Inc jumped 4.3 percent after the videogame maker’s newly launched battle royale game gained traction. Rival Take-Two lost 4.2 percent following a downgrade by a 5-star analyst.

Advancing issues outnumbered decliners by a 3.34-to-1 ratio on the NYSE and by a 3-to-1 ratio on the Nasdaq.

The S&P index recorded 39 new 52-week highs and one new low, while the Nasdaq recorded 61 new highs and nine new lows.

Reporting by Amy Caren Daniel and Shreyashi Sanyal in Bengaluru; Editing by Sriraj Kalluvila

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S&P 500 posts highest close since November 8 on trade optimism

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NEW YORK (Reuters) – The S&P 500 posted its highest closing level since Nov. 8 on Friday as investors clung to signs of progress in the ongoing trade talks between the United States and China.

Investors assessed a slew of headlines on the talks, with top trade negotiators from the two countries meeting to wrap up a week of discussions on some of the thorniest issues in their trade war.

If the two sides fail to reach a deal by midnight on March 1, then their seven-month trade war could escalate.

“People are expecting some sort of positive news on trade and tariffs with China fairly soon,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“But we won’t know until the end of next week,” he said, and, “there has been a lack of specifics.”

Optimism on the trade front and dovish signals from the U.S. Federal Reserve have driven the recent gains and left indexes well above their lows of December, when the market swooned on fears of an economic slowdown. The S&P 500 is now up about 19 percent since its late-December low.

The S&P 500 technology index was up 1.3 percent, leading gains among the 11 major S&P sectors, while the trade-exposed industrials index climbed 0.6 percent.

The Dow Jones Industrial Average rose 181.18 points, or 0.7 percent, to 26,031.81, the S&P 500 gained 17.79 points, or 0.64 percent, to 2,792.67 and the Nasdaq Composite added 67.84 points, or 0.91 percent, to 7,527.55.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., February 22, 2019. REUTERS/Brendan McDermid

All three indexes registered gains for the week, with both the Dow and Nasdaq posting a ninth week of increases.

The number of New York Stock Exchange and Nasdaq stocks hitting 52-week highs hit 367, the most since mid-September and outnumbered those hitting year lows by the widest margin in six months.

Stocks briefly pared gains after U.S. officials briefed on the negotiations said more time is likely needed in the talks given China’s resistance this week to American demands for specific steps by Beijing to end forced transfers of U.S. technology and certain other policies.

Afterward, President Donald Trump said there was a very good chance the United States would strike a deal with China to end the trade war, and that he was inclined to extend his March 1 deadline to reach an agreement.

“Right now the downside risk has been not as steep, but there’s always a concern that something happens last-minute,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

“Having a Chinese economy that stabilizes is constructive for global markets,” she said. “That’s what is key in terms of the market looking at the results.”

Kraft Heinz Co tumbled 27.5 percent, and was the biggest drag on the S&P along with a 1.7 percent fall in Class B shares of the company’s controlling stakeholder, Berkshire Hathaway Inc.

The packaged food company posted a quarterly loss, disclosed a Securities and Exchange Commission probe and wrote down the value of its iconic Kraft and Oscar Mayer brands.

Slideshow (2 Images)

Advancing issues outnumbered declining ones on the NYSE by a 2.99-to-1 ratio; on Nasdaq, a 2.45-to-1 ratio favored advancers.

The S&P 500 posted 64 new 52-week highs and three new lows; the Nasdaq Composite recorded 112 new highs and 21 new lows.

About 6.9 billion shares changed hands on U.S. exchanges. That compares with the 7.3 billion-share daily average for the past 20 trading days.

Additional reporting by Shreyashi Sanyal and Sruthi Shankar in Bengaluru; Editing by Chizu Nomiyama and Jonathan Oatis

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FCA sets $14 million annual target compensation for CEO Manley: filing

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FILE PHOTO: Fiat Chrysler Automobiles (FCA) CEO Mike Manley arrives at the memorial service held in honor of former CEO Sergio Marchionne in Turin, Italy, September 14, 2018. REUTERS/Massimo Pinca/File Photo

DETROIT (Reuters) – Fiat Chrysler Automobiles NV (FCA) has set an annual compensation target for Chief Executive Officer Mike Manley consisting of pay, cash and equity bonuses of $14 million, the automaker said in a regulatory filing on Friday.

Manley took over as the head of FCA last July after the abrupt departure of his predecessor Sergio Marchionne. The company paid its new CEO 600,442 euros ($680,240) for 2018 and he will receive a bonus for 2018 of $367,000 to be paid this year.

Manley also was granted FCA 180,364 shares for his work in 2018, which will vest in 2019 if the company meets certain targets. The fair value per share on the date those were granted was $16.61, FCA said.

His target annual compensation consists of a base salary of $1.6 million, and a bonus of $2.4 million and an equity award valued at $10 million, both linked to the company hitting certain performance targets.

Former CEO Marchionne received 6.6 million euros in compensation for 2018, which consisted of nearly 2 million euros in base pay and an annual bonus for 2017 of just over 4.6 million euros.

For the 2014 to 2017 time period, Marchionne also received 2.8 million FCA shares. The fair value per share was $14.84, FCA said.

FCA chairman John Elkann received a base salary of 1.7 million euros and no annual bonus.

Reporting by Nick Carey; Editing by Sonya Hepinstall

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Flattening U.S. yield curve in late 2018 ‘flashing red’ on economy: Fed’s Williams

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President and Chief Executive Officer of the U.S. Federal Reserve Bank of San Francisco, John Williams, addresses a news conference in Zurich, Switzerland September 22, 2017. REUTERS/Arnd Wiegmann/File Photo

NEW YORK (Reuters) – A flattening U.S. yield curve in December, which was close to being inverted, was “flashing red” about a deceleration in U.S. economic growth heading into 2019, despite some solid data at the time, New York Federal Reserve President John Williams said on Friday.

The yield curve flattens as the gap between short and long-dated yields narrow, suggesting investors’ worries about a slowing economy.

The yield curve inverts when shorter-dated yields rise above longer-dated ones. An inverted yield curve has preceded all U.S. recessions in the past 50 years.

Williams was giving closing remarks at a conference about quantitative tools, jointly sponsored by the New York Fed and the Atlanta Federal Reserve.

Reporting by Richard Leong; editing by Diane Craft

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