The Dow Jones and the S&P 500 futures point to a higher opening today. On Thursday, China lifted the ban on poultry imports from the US. Last week, the US also approved poultry meat imports from China. These symbolic gestures might not help markets sustain their record highs. However, the Dow Jones and the S&P 500 would need a much bigger feast to keep the rally going.
Dow Jones and S&P 500
The Dow Jones (DIA) and the S&P 500 (SPY) continue to trade near their all-time highs. US equity markets have denied doomsayers any major victory this year. Except for the period following the trade war escalation, bulls have had an upper hand this year. Economic data has also been reasonably strong. The US GDP beat the expectations in all three quarters this year. Notably, the US and China are negotiating phase one of the trade deal. Optimism about the US-China trade deal helped lift the Dow Jones Index and the S&P 500 to record highs.
Chicken in the game
On Thursday, China approved poultry meat imports from the US. The nearly five-year ban was lifted a week after the US took a similar step. However, China has seen soaring meat prices. Pork prices increased amid the swine fever. Nonetheless, the approved imports look positive considering the costly trade war between the two countries. Larry Kudlow, the White House economic advisor, expressed optimism about a US-China trade deal. According to a CNBC report, Kudlow spoke at an event at the Council on Foreign Relations. He said, “We’re getting close.” Kudlow also said, “The mood music is pretty good, and that has not always been so in these things.”
Dow Jones and S&P 500 need a bigger feast
Optimism about the US-China trade deal helped propel the Dow Jones and the S&P 500 to record highs. While incremental measures like allowing poultry imports and sweet talk about the trade deal help sustain the rally, markets would need a bigger feast to increase from these levels. The earnings season is almost over. As a result, markets look at the US-China trade talks for direction.
President Trump and market crash
Notably, President Trump also tracks the Dow Jones and the S&P 500 closely. He comments when markets hit a record high or any other milestone. However, a survey of high net worth clients showed that most of them expect a market crash sometime in 2020. A Dow Jones and S&P 500 crash would be the last thing that President Trump would want before the 2020 election. Read Market Crash imminent, Super Rich Say: Time to Panic to learn more.