Dow pushes through 25,000 as US stocks hit three-month high

Stocks on Wall Street soared to their highest level in three months as prospects for world trade and growth look better than earlier feared.

The World Bank estimated the global economy will still expand 3.1% this year, unchanged from its forecast in January and matching the pace of growth seen in 2017, itself the strongest year since 2011.

In addition, the US trade gap narrowed in April, largely because Americans cut purchases of foreign-made goods while boosting exports, including a record amount of oil.

It isn’t clear whether the Trump administration protectionist policies and new tariffs affected the April figures. Investors’ fears of a world trade downturn have been one of the negative factors in the market this year.

The US is conducting trade negotiations with its Nafta partners, Canada and Mexico, as well as China.

China has offered to purchase nearly $US70 billion of US farm, manufacturing and energy products if threatened tariffs are dropped,

The European Union is preparing retaliatory action on US imports in response to tariffs on steel and aluminium goods.

Trade tensions cap market gains
CIBC Atlantic Trust Private Wealth Management chief investment officer Dave Donabedian says trade worries have kept a lid on stock gains.

“If you just look at the trend in US economic growth and the trend in corporate earnings, you might expect this to be another highflying year for the US market, and it hasn’t been,” he says.

“It’s mostly been [trade] threats and accusations back and forth, but it raises all sorts of uncomfortable risks around the way that global business gets done and the potential that what really so far has been spats and skirmishes could deteriorate into a scaled protectionist trade war.”

On Wall Street, the Dow Jones Industrial Average surged 346.41 points, or 1.4%, to close at the session's high of 25,146.38,  It's only the second time the Dow has closed above 25,000 since March 13 when concerns over Facebook’s data-privacy practices sparked a selloff in technology stocks.

The S&P 500 rose 0.9% to 2772.35, adding to a recent resurgence in tech stocks that helped the index notch a fourth straight session of advances. The Nasdaq Composite jumped 0.7% to 7689.24 for its third successive all-time high.

Financial stocks were among the best performers, benefiting from rising Treasury yields ahead of the Federal Reserve’s meeting next week. Higher bond yields tend to support lending profitability.

The benchmark 10-year US Treasury note climbed to 2.977% from 2.917% on Tuesday.

Copper rises five-month high
Shares of materials companies also climbed with copper continuing its recent rally. Copper futures added 2%, closing at their highest level in more than five months.

Oil prices fell to a near two-month low, weighed down by data showing increased US.stockpiles and production.

US crude fell 1.2% to $US64.71 a barrel while Brent, the global benchmark, declined 0.5% to $US75.03.

The Stoxx Europe 600 closed down less than 0.1%. Italy’s FTSE MIB Index erased early declines and rose 0.3% after shedding 1.2% in the previous session.

New Italian Prime Minister Giuseppe Conte said his government would push for a change of the rules underpinning the eurozone, spurring losses in Italian stocks and bonds.

Spain’s IBEX 35 rose 1.1% after a change of government last week, while France’s CAC 40 lost less than 0.1%, Germany’s DAX rose 0.3% and the UK’s FTSE 100 gained 0.3%.