NEW YORK: Wall Street closed higher on Wednesday as investor optimism was stoked over hopes the United States and China could iron out a trade deal, and benign inflation data suggested the Federal Reserve would hold interest rates steady in the near term.
All three major U.S. stock indexes gained ground, with the S&P 500 and the Nasdaq posting their fourth consecutive advances. For the second straight day, the S&P 500 closed above its 200-day moving average, a key technical level.
Stocks briefly pared gains following a late-morning tweet by U.S. Senator Marco Rubio saying he would introduce a bill to "tax corporate buybacks the same way as dividends."
In Beijing, U.S. Treasury Secretary Steven Mnuchin said "so far, so good," regarding ongoing talks aimed at resolving the U.S.-China trade dispute, adding he hoped for "productive" meetings in the days ahead.
"The markets are extremely vulnerable to news," said Bernard Baumohl, chief global economist at the Economic Outlook Group in Princeton. "(Investors are) waiting and hoping for good news to come out of the trade negotiations with China, and for continued signs that the economy is still growing at a healthy pace without heating up inflation."
The U.S. Labor Department reported consumer prices were unchanged for the third consecutive month in January, in a sign the Fed could hold interest rates steady for the time being.
Fourth-quarter earnings season is approaching the finish line, with more than two-thirds of the S&P 500 having reported.
While analysts now see fourth-quarter earnings growth of 16.6 percent, the outlook for the current quarter is less upbeat.
First-quarter profit is projected to fall 0.3 percent from a year ago, marking the first loss since the earnings recession that ended in 2016, according to Refinitiv data.
The Dow Jones Industrial Average rose 117.51 points, or 0.46 percent, to 25,543.27, the S&P 500 gained 8.3 points, or 0.30 percent, to 2,753.03 and the Nasdaq Composite added 5.76 points, or 0.08 percent, to 7,420.38.
Of the 11 major sectors in the S&P 500, all but utilities and communications services ended the session in positive territory.
Energy was the largest percentage gainer as oil prices saw their biggest increase since late January.
Groupon Inc sank 11.1 percent, one the biggest losers on the Nasdaq, as reduced traffic led to a fourth-quarter profit miss.
Generic drugmaker Teva Pharmaceuticals Industries Inc dropped 7.8 percent after forecasting a weaker-than-expected 2019 due to new competition for branded drugs.
General Electric Co advanced 3.9 percent following news the conglomerate booked the most orders for electricity-generating gas turbines in 2018.
Levi Strauss & Co filed documents for an IPO after more than three decades as a privately-held company. Rivals Abercrombie & Fitch, Gap Inc and American Eagle Outfitters Inc all dipped on the news.
Cisco Systems Inc shares rose in after-market trading after posting better-than-expected quarterly results as the network gear maker benefited from its shift to newer businesses.
Advancing issues outnumbered declining ones on the NYSE by a 1.86-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favored advancers.
The S&P 500 posted 38 new 52-week highs and no new lows; the Nasdaq Composite recorded 78 new highs and 19 new lows.
Volume on U.S. exchanges was 6.91 billion shares, compared to the 7.45 billion average over the last 20 trading days.
In Europe shares rose on Wednesday as optimism about trade talks lifted global markets and data showed earnings growth forecasts for Europe were stabilising after steep downward revisions.
Pan-European STOXX 600 index was up 0.6 percent, rising for the third straight session, with Germany's trade-sensitive DAX up 0.4 percent.
Wall Street also extended its rally as hopes grew that the U.S. and China would hammer out a trade deal and avert a new round of U.S. tariffs on imports from China set to kick in next month.
"The situation on US-China trade remains fluid, but our Asia strategy team's base case is that there will be a deal," Nomura analysts said in a strategy note.
Madrid's IBEX lagged, ending flat, after Spain's parliament rejected a draft 2019 budget, pushing the country close to an early national election amid an increasingly fragmented political landscape.
The more volatile, smaller Lisbon market was dragged lower by the political uncertainty in Madrid, ending down 1.2 percent.
Amid the labyrinthine twists and turns of Brexit, London's FTSE outperformed, up 0.8 percent to a 4-month high, as data showed British inflation fell to a two-year low in January.
"They came in lower than expected and pretty much have taken off any pressure the BOE might have had in regard to prices going up too fast," said City of London Markets trader Markus Huber.
"Furthermore it could give the BOE more room to lower rates should the economy slide into a recession either due to prevailing Brexit uncertainty or a Brexit no deal," he added.
A fresh batch of corporate earnings triggered strong price moves both upwards and downwards.
Dutch bank ABN Amro, hit by loan impairments, fell 7.7 percent with fourth-quarter net profit way below analysts' expectations.
Dutch blue chip peer Heineken had a totally different welcome from the market, rising 6 percent on better-than-expected results.
Still in the Netherlands, paint maker Akzo Nobel jumped 3.3 percent after marginally beating expectations.
Amundi, the euro zone's largest asset manager, was also cheered by investors, rising 4.4 percent, after confirming its profit targets for 2020 despite adverse market conditions in the fourth quarter.
Among other companies whose results stood out was Ingenico, up 10.5 percent to the top of the STOXX 600, online gambling firm Kindred Group, up 7.5 percent and Swedish Match which rose 9.2 percent.
These positive results come in as earnings forecasts for STOXX 600 companies are stabilizing after experiencing a free fall since last November, I/B/E/S Refinitiv data shows.
Earnings for the last quarter of 2018 are now expected to rise 3 percent year-on-year, a more optimistic outlook than the 2.3 percent forecast of last week.
German lighting company Osram soared 14.3 percent after it confirmed that it was in takeover talks with Bain Capital and Carlyle Group, which are considering a joint bid for up to 100 percent of the group. - Reuters