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Stocks close higher on optimism over China trade talks

CNBC logo CNBC 11/1/2018 Fred Imbert

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Stocks ended higher Thursday after comments from President Donald Trump indicated potential progress in U.S.-China trade relations. 

The Dow gained 264 points as DowDuPont outperformed. The S&P 500 added 1 percent, with the materials leading. The Nasdaq advanced 1.75 percent. 

Trump said in a tweet Thursday that he had a "long and very good conversation" with Chinese President Xi Jinping on trade. He also said meetings between the two at the upcoming G-20 summit are being scheduled. 

Equities also moved higher on the back of strong earnings results from companies like Cigna and DowDuPont. Thursday's moves come after investors capped off a volatile October with a strong two-day rally that saw the Dow surge more than 650 points. 

But "as pleasant as the last two sessions have been to experience they do not by themselves indicate that the worst is over," said Michael Shaoul, chairman and CEO of Marketfield Asset Management. "All we can say so far is that Monday's accelerated drop lower found good support for the S&P 500 just above 2,600, and any subsequent retest should at least struggle to penetrate this level." 

But despite the recent rally, the Dow closed last month down 5.1 percent, its biggest one-month fall since January 2016. The S&P 500 lost $1.91 trillion in October, according to S&P Dow Jones Indices analyst Howard Silverblatt. Losses were spread widely across industry sectors. October was also the worst month for the S&P 500 since September 2011. 

Equities sold off last month amid concern about rising interest rates and U.S-China trade tensions, as well as worries that earnings growth may be slowing down.

"I don't think we're out of the woods yet," said Aaron Clark, a portfolio manager at GW&K Investment Management. "Sentiment has clearly changed more than fundamentals." 

"I think we were oblivious to the risks we were facing ... Now we're sort of walking on eggshells," Clark said. 

On Thursday, sentiment was lifted by better-than-forecast earnings from DowDuPont and Cigna. Shares of DowDuPont rose 6.7 percent while Cigna gained more than 2 percent. 

Tech giant Apple is scheduled to report earnings after the bell Thursday. The company's stock slipped 0.3 percent. 

In economic data, initial U.S. weekly jobless claims fell to 214,000 last week while continuing claims remained at their lowest levels since 1973. The data come ahead of the monthly jobs report, which is set for release Friday morning.


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