Wall Street: The Largest Jump in Stocks in Two and a Half Years, Fears of Trade War Eased

On Wall Street, stock prices jumped more than 2.5 percent on Monday, marking their largest daily increase in two and a half years, as fears of a trade war subsided following news that the U.S. and China are willing to negotiate tariffs and trade imbalances.

The Dow Jones rose by 669 points or 2.84 percent, to 24,202 points, while the S&P 500 increased by 2.72 percent, to 2,658 points, and the Nasdaq index by 3.26 percent, to 7,220 points. After these indices lost about 6 percent last week, their largest weekly loss since January 2016, they recovered part of those losses with the largest daily jump since August 2015.

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Fears of a trade war, triggered by U.S. President Donald Trump’s announcement of tariffs of up to $60 billion on Chinese imports, eased after messages from both sides indicated a willingness to negotiate.

– Over the weekend, there were indications that a tariff agreement with China may not be as far off as previously thought. A trade war is unlikely as both sides are willing to negotiate to resolve issues, says Bucky Hellwig, Vice President at BB&T Wealth Management.

Although willing to negotiate, China on Monday called on members of the World Trade Organization (WTO) to unite in efforts to stop the U.S. from undermining the organization, urging them to oppose U.S. tariffs intended to punish alleged Chinese intellectual property theft.

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– The market has recovered after a sharp decline last week due to possible talks between China and the U.S. However, I believe we are not out of the woods yet; political uncertainty still exists, says Dennis Dick, Director at Bright Trading.

On Wall Street, stock prices rose in all 11 major sectors of the S&P 500 index yesterday, with the technology sector leading the way with a 4 percent increase, followed by the financial sector with a 3.2 percent rise.

The Largest Growth Achieved by Microsoft Stock

In the technology sector, Microsoft stock led with a 7.6 percent increase, followed by Intel stock with a 6.3 percent rise, after analysts raised their target prices for these stocks.

After a sharp decline a week earlier, Facebook stock slightly rose by 0.4 percent yesterday, which has been under pressure since it was revealed that the consulting firm Cambridge Analytica, which worked on President Trump’s election campaign, gained access to data from 50 million Facebook users without their consent.

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Meanwhile, European stock prices fell yesterday. The London FTSE index slid by 0.48 percent to 6,888 points, while the Frankfurt DAX weakened by 0.83 percent to 11,787 points, and the Paris CAC by 0.57 percent to 5,066 points.

Average Bonus Increased by 17 Percent

The average bonus on Wall Street increased by 17 percent last year to $184,220, while the total amount paid by banks to employees reached $31.4 billion.

In the securities trading industry, there were 176,900 people employed in New York last year, a slight decline after three years of continuous employment growth in that industry, according to a report from New York’s Chief Financial Officer.

It also shows that employment in this industry, a key component of the city’s economy, is still 6 percent lower than before the financial crisis in 2007.

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The profit from the operations of companies on the New York Stock Exchange (NYSE), the largest stock exchange in the world, jumped by 42 percent last year to $24.5 billion, the highest level since 2010, thanks to an increase in fees from asset management, securities issuance, and advisory services related to mergers and acquisitions, the report published on Monday states.

– It is too early to say how increased volatility in financial markets at the beginning of this year will affect profits in 2018, stated Thomas DiNapoli, New York’s Chief Financial Controller, in the report.

The report is based on data about tax revenues and does not include stock options and other forms of various fees. In a conversation with reporters on Monday, DiNapoli said it is too early to estimate how changes in federal tax law, which took effect at the beginning of this year, will affect business in the coming year.

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It is estimated that one in ten jobs in New York is directly or indirectly related to securities trading. Over the past eight years, the average bonus on Wall Street has increased by 31 percent, while the federal minimum wage has remained unchanged at $7.25 per hour since 2009.