(MENAFN - Baystreet.ca) Stocks rose on Wednesday, but gave up most of their gains heading into the close even after the USA and China signed a highly anticipated phase-one trade agreement as most of the details were already known and investors anticipated some speed bumps on the way to phase two's signing.
The yield on two-year Treasuries declined less than one basis point to 1.57 per cent, the lowest in a week.
U.S. president Donald Trump described the signing as "a great deal for both countries" at the signing ceremony, with China's vice-premier Liu He calling it a "landmark agreement". -China phase one trade deal.
Trump said he would remove all US tariffs on Chinese imports as soon as the two countries complete a Phase 2 trade agreement, on which negotiations will start soon.
But investors are concerned that the trade deal with China will keep tariffs in place on almost two-thirds of Chinese goods at least until the presidential election in November. The deal commits China to do more to crack down on the theft of American technology and corporate secrets by its companies and state entities, while outlining a $200 billion spending spree to try to close its trade imbalance with the U.S. Soybeans slumped after China signaled purchases would be demand-based.
"We're leaving tariffs on, but I will agree to take those tariffs off if we are able to do 'phase two.' In other words, we're negotiating with the tariffs", Trump said on Wednesday.
"It's anti-climatic", said Jim Paulsen, chief investment strategist at the Leuthold Group.
Elsewhere, a closely-followed gauge of factory sector conditions in the jurisdiction of the Federal Reserve Bank of NY continued to outperform national manufacturing sector gauges like that from the Institute for Supply Management. But expectations of the near-term outlook "remained modestly favorable".
And White House Economic Advisor Larry Kudlow helped with this morning's rally, saying that the White House plans to unveil more tax cuts this year. The news followed a speech delivered by Russian President Vladimir Putin to lawmakers. Economists had expected a 0.2% increase.
What's more, Target shares dropped more than 7% after the retailer announced disappointing holiday same-store sales. The company said weak sales of electronics, toys and home goods crimped sales growth to just 1.4% in November and December.
"We see the upcoming reporting season marking a turning point after a period of weak profit growth for USA companies, one that should push equities higher this year even though the potential for further multiple expansion is modest in our view", he said in a note.
Stocks in Asia saw a muted start to Thursday trading as investors parsed details of the U.S.
Crude Oil (CL) dropped after flirting with the $58 mark for most of the day. The Russell 2000 picked up 6.66 points, or 0.4%, to 1,682.40.
Prices for the 10-Year U.S. Treasury gained, lowering yields to 1.78% from Tuesday's 1.81%.