The S&P 500 added 0.4 percent to set a third consecutive record, after rising steadily in the closing hours of the session, while the Nasdaq Composite rose 0.8 percent. Both benchmarks were on track for their fifth consecutive monthly gain, with the S&P climbing more than 5% in August, with the Nasdaq rising nearly 7%.
Tuesday’s decisions came after the United States and China reaffirmed their commitment to their “phase one” trade deal, a rare sign of cooperation after weeks of wrangling over issues such as the future of the platform. Chinese social media form TikTok in the United States.
The lowest reading in US consumer confidence since 2014 tempered some of the optimism around China. The Conference Board index unexpectedly fell to 84.8 in August, the lowest level since the start of the coronavirus crisis, from 91.7 revised the previous month.
European equities ended the day mixed, even after data showed an improving business climate in Germany. The Stoxx Europe 600 slipped 0.3% with German and French benchmarks barely changed. The UK’s FTSE 100 underperformed with a decline of 1.1% due to the pullback of mining and energy companies.
Data shows that German gross domestic product contracted 9.7% in the second quarter, which was the peak of the coronavirus pandemic in Europe, as private consumption, investment and exports collapsed. An earlier reading, however, showed that the economy contracted 10.1 percent between April and June.
At the same time, a survey by the highly regarded Ifo Institute in Germany showed that sentiment among business leaders in Europe’s largest economy had improved to its highest level since February. The research group’s business climate index rose to 92.6 in August, from 90.4 in July.
The data boosted the euro, which rose 0.4 percent against the dollar to buy $ 1.1831.
The 10-year US Treasury yield, which moves inversely to its price, rose 0.039 percentage points to 0.685%. The yield on German 10-year bonds rose 0.015 percentage points to minus 0.44%,
Monica Defend, head of global research at asset manager Amundi, said she “really struggles with the idea that the S&P 500 will continue to climb.” She argued that while the markets were forecasting a V-shaped recovery for the US economy, “we would expect something less resilient” after US jobless claims rose above. 1 million last week.
She added, however, that she expected US inflation, which is traditionally negative for stocks and bonds, to remain low.
Investors are grappling with conflicting views on inflation, which has become more difficult for economists to predict due to the pandemic.
Many are looking to the Jackson Hole meeting of central bank governors, to be held Thursday and Friday in a virtual format, for clues.
“We hope for more colors on inflation targeting from [Federal Reserve chairman] Jay Powell in Jackson Hole, ”Ms. Defend said.
German GDP data was a ‘last glance in the rearview mirror,’ wrote ING’s Carsten Brzeski, predicting a recovery in the July-September quarter due to a reduction in value added tax and domestic summer tourism. “The economy will post one of its best quarterly performances in the third quarter,” he said.
Shamik Dhar, chief economist at BNY Mellon, said that, as coronavirus cases rose again across Europe, hospitalization and death rates did not appear to return to levels seen in March and April.
“The course of the disease remains extremely uncertain and this latest peak could lead to more regional lockdowns,” he said. “But my main view is that Germany will bounce back,” in part because of pent-up consumer demand.
August delivery contracts for Brent, the international oil benchmark, added 1.8 percent to $ 45.92 a barrel.
Video: Welcome to the rally of everything