US open: Dow comes out the gate swinging, boosted by rallying energy stocks
Shares on Wall Street came out the gate hot on Wednesday as investors seemingly shrugged off global trade concerns and energy stocks rallied after US API data showed that crude stocks for the previous week fell more sharply than expected.
At 1520 BST, the Dow Jones Industrial Average was up 0.90% to 24,500.70, while the S&P 500 gained 0.69% to 2,741.77 and the Nasdaq was 0.46% higher at 7,596.04.
Connor Campbell, a financial analyst at SpreadEx, said, "Firmly strapped into the trade war rollercoaster, the markets saw a chunky upswing on Wednesday afternoon as Trump appeared to pull back from the brink (if only on one of the many issues between the US and China)."
"Initially reported over the weekend as a severe, specific restriction on Chinese firms investing in US tech companies, Trump instead said that he would be expanding the authority of the Committee on Foreign Investment in the United States. And though that likely will involve CFIUS cracking down on certain Chinese investments, the fact that China itself wasn’t solely targeted appears to have sent a wave of relief through the markets," added Campbell.
Oanda analyst Craig Erlam said: "There hasn't been much progress - positive or negative - in recent days although US Treasury Secretary Steve Mnuchin did deny reports that the country is looking to block investment from China in US tech, instead claiming there will be a statement aimed at all countries trying to steal technology. Given related comments from the Trump administration, it would be safe to assume this primarily targets China but clearly, there is a desire to involve others as well."
Energy shares gained at the open on the back of oil prices gains after the latest US API data on Tuesday showed that crude stocks declined by 9.2m barrels for the week ending 22 June, versus expectations for a 2.3m barrel draw.
Oil was also boosted by news that the US State Department was pushing allies to cut oil imports from Iran to zero, together with negative news on the supply front out of Canada and Libya .
Erlam said that if the API data is confirmed by the EIA later on Wednesday, this could provide a further support to Brent and WTI crude, "which are once again quite elevated and not trading far from their recent highs, despite the agreement last week".
In corporate news, General Mills gained 1.61% after the release of its fourth-quarter numbers, while Summit Therapeutics crashed 81.34% after saying it will stop developing its Duchenne muscular dystrophy drug after it failed to meet the goals of a mid-stage study.
Elsewhere, World Wrestling Entertainment was 4.86% higher in pre-market trade after it signed a deal for its most prominent wrestling programming with Comcast-owned CMSA, USA Network and Fox.
Fast food company Sonic Corp dropped 9.29% after its quarterly earnings late on Tuesday beat expectations but revenue fell short.
On the data front, orders for durable goods fell by 0.6% month-on-month in May following a downwardly-revised 1% decline in April.
May saw the biggest drop in new car and truck orders since 2015, the second straight decline in demand for durable goods, indicating that heightened trade tensions between the White House and other nations could be causing businesses to hesitate.
Economists had forecast a 1.3% decrease in orders for durable goods.
Elsewhere, US pending home sales dropped 0.5% to a reading of 105.9 in May, according to the National Association of Realtors.
The NAR's index, which tracks real-estate transactions where a contract has been signed but had yet to be closed, hit a four-month low in May.
The reading missed the forecasts of a 0.6% increase.
EIA crude stocks data is still to come at 1530 BST.