US Stocks Grind Higher As China Cuts Taxes On Trading, Eyes Further Stimulus: What's Driving Markets Monday?

Wall Street kicked off the week positively, boosted by an improvement in global risk sentiment following China’s announcement of a 50% reduction in the stamp duty on domestic stocks and guidelines for relaxing residential housing loans over the weekend.

By midday trading in New York, all major U.S. stock indices were in positive territory, with sectors tied to growth such as real estate, materials and industrials showing better performance compared to the rest of the market.

Chinese companies listed on U.S. exchanges experienced a rally, with Tencent Music Entertainment Group TME surging by 7.3%, Baidu, Inc. BIDU rising by 3.3% and Alibaba Group Holdings, Inc. BABA gaining 2.5%.

During last week’s Jackson Hole Symposium, Fed Chair Jerome Powell indicated the Federal Reserve is ready to raise interest rates further if necessary. Yet he also emphasized the importance of proceeding cautiously to bring inflation back to the target of 2%. Traders interpreted this as a signal for a potential rate pause in September and a close call between a rate hike and a hold in November.

Cues From Monday’s Trading:

The Dow added 150 points or 0.44%, slightly outperforming both the S&P 500 Index, up 0.3%, and the Nasdaq 100, up 0.2%.

Small caps are the bright spot, with the Russell 2000 index up 0.9%.

US Index Performance On Monday

Monday’s Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.31% higher to $441.33
• The SPDR Dow Jones Industrial Average ETF DIA rose 0.5% to $345.04
• The Invesco QQQ Trust QQQ edged 0.3% higher to $365, according to Benzinga Pro data.

Looking at S&P 500 sectors:

• The Real Estate Select Sector SPDR Fund XLRE, the Industrials Select Sector SPDR Fund XLI and the Materials Select Sector SPDR Fund XLB rose 0.8% each, outperforming all other sectors.
• The Utilities Select Sector SPDR Fund XLU and the Consumer Discretionary Select Sector SPDR Fund XLY were the undeperformers, both flat for the day.

Stocks In Focus:

Hawaiian Electric Industries, Inc. HE shares rebounded by over 40% as the company denied responsibility for the wildfire that destroyed the town of Lahaina.
• 3M Company MMM rose nearly 6% following reports that the company has reached a preliminary agreement to settle over 330,000 lawsuits related to its faulty earplugs for a sum of $5.5 billion.
• Bostoc Scientific Corp. BSX saw a 6% rise in its stock value after the outcomes of a clinical trial for a novel atrial fibrillation treatment method successfully achieved its primary effectiveness and safety goals.
• Horizon Therapeutics Public Limited Company HZNP rose about 5% following a Federal Trade Commission move that would allow the completion of the deal for the biotech company to be acquired by Amgen, Inc. AMGN.
• XPeng, Inc. XPEV rallied nearly 3.5% on the China move and the company's decision to buy DiDi's smart electric vehicle assets for $744 million.

Commodities, Bonds, Other Global Equity Markets:

Crude oil held steady, with a barrel of WTI-grade crude trading at $79.

Treasury yields were slightly lower, with the 10-year yield up down 2 basis points to 4.21% and the two-year yield up by 2 basis points to 5.05%. The iShares 20+ Year Treasury Bond ETF TLT was 0.1% lower for the day. 

The dollar slightly fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrencyShares Euro Currency Trust FXE, was 0.2% higher to 1.0810.

European equity indices ended in the green. The SPDR DJ Euro STOXX 50 Etf  FEZ rose 1.1%. 

Gold rose 0.4% to $1,922/oz and silver gained 0.3% to $24.29. Bitcoin BTC/USD was 0.2% higher to $26,142.

Read Next: After Fed’s Jerome Powell, G7 Central Bank Chief Fires A ‘Higher For Longer’ Rate Warning: ‘Inflation Fight Isn’t Won Yet'

Staff writer Piero Cingari updated this report midday Monday. 

Photo by AshDesign on Shutterstock.