KEY POINTS

  • U.S. and China will sign phase one of trade deal in Washington
  • Germany's economy expanded by only 0.6% last year.
  • Russia's government has reportedly resigned

U.S. stocks traded higher on Wednesday as traders await the signing of phase one of the U.S.-China trade deal in Washington.

The Dow Jones Industrial Average rose 145.99 points to 29,085.66 while the S&P 500 climbed 11.39 points to 3,294.54 and the Nasdaq Composite Index gained 35.66 points to 9,286.99.

Investors are concerned that the trade deal with China will keep tariffs in place on nearly two-thirds of Chinese goods at least until the presidential election in November. Treasury Secretary Steven Mnuchin said on Tuesday that tariffs on Chinese imports will remain in place until Beijing and Washington reach an enforceable “phase two” agreement. The deal will also punish China for failing to accomplish promises made on currency, intellectual property and trade balance.

“Despite the landmark signing of the U.S.-Sino trade deal today, markets are unenthused,” said Nema Ramkhelawan-Bhana, an economist at Rand Merchant Bank in Johannesburg. “Phase one, though positive, is merely the start of a long process to undo the damage already inflicted on the global trade order.”

White House economic adviser Larry Kudlow said the Trump administration will introduce more tax cuts later this year.

“I am still running a process of Tax Cuts 2.0. We’re many months away – it’ll come out sometime later during the campaign,” Kudlow told CNBC. “Tax Cuts 2.0 to help middle-class economic growth: That’s still our goal.”

Russia’s state news agency Tass reported that its government has resigned, citing comments from the Russian Prime Minister Dmitry Medvedev. The news followed a speech delivered by Russian President Vladimir Putin to lawmakers.

The producer price index edged up 0.1% in December. Economists had expected a 0.2% increase. Wholesale inflation rose only 1.3% in 2019, about half as much as it did in the prior year.

Bank of America (BAC) posted fourth-quarter profit of $7 billion, exceeding analysts’ expectations, partly on a rebound in its trading revenue.

Goldman Sachs Group (GS) posted quarterly profit that fell well below analysts’ expectations due to weakness investment banking business and higher operating costs.

Mark Haefele, global chief investment officer at UBS GWM, is optimistic about the earnings season.

“We see the upcoming reporting season marking a turning point after a period of weak profit growth for U.S. 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. “So we have modestly increased our forecast for U.S. [earnings] growth to 6% this year.”

Germany’s economy grew by only 0.6% in 2019, the weakest expansion in six years.

Overnight in Asia, markets finished lower. China’s Shanghai Composite dropped 0.54%, while Hong Kong’s Hang Seng fell 0.39%, and Japan’s Nikkei-225 tumbled 0.45%.

In Europe markets finished mixed, as Britain’s FTSE-100 gained 0.27%, France’s CAC-40 slipped 0.14% and Germany’s DAX fell 0.18%.

Crude oil futures fell 0.74% at $57.80 per barrel and Brent crude slipped 0.71% at $64.03. Gold futures rose 0.39%.

The euro gained 0.28% at $1.1159 while the pound sterling edged up 0.12% at $1.3032.