US open: Stocks extend rally into 2020

US stocks opened higher on the first day of 2020 thanks to some encouraging news out of China.

As of 1530 GMT, the Dow Jones Industrial Average was up 0.66% at 28,726.09, while the S&P 500 was ahead 0.56% at 3,248.79 and the Nasdaq Composite started out the session 0.84% stronger at 9,048.42

The Dow opened 187.65 points firmer on Thursday after Wall Street's banner year came to an end on Tuesday.

Sentiment received a boost late on Tuesday after President Donald Trump, revealed he would be signing a first phase trade deal with China at the White House on 15 January.

Trump also announced that he would be heading to Beijing at a later date to initiate phase two talks.

Also in focus was news that China's central bank will cut the required reserve ratio for commercial lenders by 50 basis points from 6 January to help bolster its slowing economy.

According to the People’s Bank of China, the move will release around 800bn yuan (£87.0bn) of liquidity into the financial system. As it stands, the required reserve ratio is 13.0% for big banks and 11.0% for smaller ones.

SpreadEx analyst Connor Campbell said: "China kicked off 2020 with a belated Christmas present for the markets, the effects of which were still being felt on Thursday.

"That this comes after the 'phase one' trade agreement with the USA – set to be signed on January 15th – caused the markets to have a very merry start to the New Year."

On a more cautious note, strategists at Bank of America Global Research forecast just a 2.0% rise for the S&P 500 in 2020 to reach 3,300 points by year-end, telling clients that some of 2020's gains were likely pulled into 2019 and that they would "expect more realistic returns in 2020".

However, they added that they "would expect more realistic returns in 2020. But our long-term bullish stance on US stocks is still supported by valuation."

On the data front, the number of Americans filing for unemployment benefits fell last week, according to figures released by the Labor Department on Thursday.

Jobless claims came in at 222,000, down 2,000 from the previous week’s level, which was revised up by 2,000. Economists had been expecting a level of 225,000.

Meanwhile, the four-week moving average came in at 233,250, up 4,750 from the previous week's average, which was revised up by 500 - the highest level for the average since January 2018.

Elsewhere, economic activity in the US manufacturing sector continued to expand at a modest pace in December, with the IHS Markit's Manufacturing PMI coming in at 52.4 - slightly worse than the previous estimate and market expectations of a reading of 52.5.

Tesla shares roared ahead at the bell after analysts at Canaccord Genuity raised their price target on the stock from $375.0 per share to $515.0.

Also boosting the carmarket's shares on Thursday were remarks from its general manager in China, who reportedly said that the firm was set to ramp-up deliveries of its Chinese made Model 3s in January.

No major corporate earnings were slated for release on Thursday.