US close: Stocks close higher following solid Chinese data
Wall Street stocks closed higher on Wednesday after a report revealed that China's services sector expanded at its fastest pace in three months in August and a controversial bill that led to recent tensions in Hong Kong was withdrawn.
At the close, the Dow Jones Industrial Average was up 0.91% at 26,355.47, while the S&P 500 was trading 1.08% higher at 2,937.78 and the Nasdaq Composite closed out the session 1.30% firmer at 7,976.88.
The Dow Jones closed 237.45 points higher on Wednesday after closing sharply losers during the previous session following Washington's move at the weekend to slap a 15.0% tariff on over $125bn-worth of Chinese goods. Although China imposed its own new charges on some US products, some reports indicated that Beijing was, in fact, proceeding more slowly.
But things took a turn for the better on Wednesday following the release of the Caixin/Markit services sector Purchasing Managers' Index, which came in at 52.1 for last month — the highest reading since May.
Still in Asia, Hong Kong chief executive Carrie Lam announced the formal withdrawal of the proposed extradition bill that had ignited the protests which had roiled the Chinese-ruled city over recent months. The Hang Seng rocketed ahead roughly 4% on the back of the news.
Heading across the pond, UK prime minister Boris Johnson's plans to withdraw Britain from the European Union on 31 October without a formal agreement were shot down by a cross-party alliance of lawmakers on Tuesday. Johnson immediately announced that he would push for a snap election.
Sterling shot up 1.19%% on the news, climbing past $1.22 after falling to its lowest level since 2016 just one day earlier.
On the data front, US mortgage application volume decreased 3.1% in the week ended 30 August, according to the Mortgage Bankers Association. Volume was 62% higher year-on-year, while refinancing applications, which had been strong over the past month, fell for the second straight week - down 7%.
In other news, America's shortfall in trade with the rest of the world narrowed in July, albeit due in part to weaker import demand.
According to the Department of Commerce, the US deficit on trade in goods and services shrank 2.7% month-on-month to $54bn, although year-to-date the deficit was 8.2% or $28.2bn wider. Economists had forecast the deficit would remain unchanged versus the previous month at -$55.2bn.
Sentiment also got a boost when New York Federal Reserve President John Williams stated the central bank would act as appropriate to sustain the current economic expansion.
He said low inflation was "indeed the problem of this era" and that it was "a reflection of the broader economic picture".
In corporate news, American Eagle Outfitters plummeted 11.62% despite posting a record second quarter in terms of revenues, while Slack slumped 13.26% in extended trading after posting its first earnings as a public company after the close.