META Meta Platforms Inc

By Mark DeCambre, MarketWatch

The Federal Reserve's policy-setting meeting is set to start later this morning

U.S. stocks on Tuesday jumped, pushing the broad-market S&P 500 to within 1% of a closing record as President Donald Trump tweeted that had a productive conversation with Chinese counterpart Xi Jinping.

How are benchmarks faring?

The Dow Jones Industrial Average rose 306 points, or 1.2%, at 26,413, the S&P 500 index advanced 33 points, or 1.2%, at 2,923, while Nasdaq Composite Index climbed 143 points, or 1.8%, at 7,986.

The day's gains put the S&P 500 about 0.8% from its April 30 closing record, the Dow was about 1.6% from its Oct. 3 peak, while the Nasdaq was just a little over 2% from its May 3 closing record, according to FactSet data.

What's driving the market?

U.S. President Donald Trump on Tuesday said over Twitter that there will be an "extended meeting" with President Xi Jinping of China (http://www.marketwatch.com/story/trump-announces-extended-meeting-with-xi-at-the-g-20-2019-06-18) at the Group of 20 meeting in Japan. Reports from Bloomberg News also confirmed a plan for the two leaders to meet on the sidelines of the gathering of developed global leaders.

The tweet comes after U.S.-Chinese trade talks had stalled, and there had been doubt over whether an additional 25% tariff on more than $300 billion in Chinese goods would go into effect soon, further escalating the protracted Sino-American trade confrontation, which has hobbled global markets.

Read:'Currency war' fears rise as Trump slams Draghi's hint at more ECB stimulus (http://www.marketwatch.com/story/currency-war-fears-rise-as-trump-slams-draghis-hint-at-more-ecb-stimulus-2019-06-18)

Equity markets were already buoyant after ECB President Mario Draghi at an annual central bank conference in Sintra, Portugal said policy makers would consider "in the coming weeks" how to adapt its policy tools "commensurate to the severity of the risk" to the economic outlook, a signal that the central bank may be willing to lower rates. The central banker's remarks sent the euro sliding against the U.S. dollar.

Draghi's comments come as the Federal Reserve is set to kick off its policy-setting meeting later Tuesday, with expectation that the Fed will indicate its willingness to reduce benchmark borrowing costs this year amid global trade tensions, a slowdown in the global economy as well as in the U.S. Investors will want to see if those expectations match up to what the Fed is thinking, though no move on interest rates is expected at this week's meeting.

What are strategists saying?

"The prospect of 'additional stimulus' jolted stock markets higher, and it appears the ECB is following in the Fed's footsteps of using dovish language," wrote David Madden, market analyst at CMC Markets UK, in a Tuesday research note.

"And his comments will add further pressure on the US Federal Reserve to cut rates. Following his speech, yields on a 10 year bund headed further into negative territory -- to around 30bps -- forcing people's hunt for yield to continue apace," Mark Benbow, manager of the Kames Short-Dated Yield Bond Fund, said in a note.

"If the Fed doesn't appear sufficiently dovish -- including taking the word "patient" out of their statement -- or the G20 meeting doesn't result in significant progress in the trade war with China, then the market could experience a sharp pullback," wrote Chris Zaccarelli, chief investment officer for Independent Advisor Alliance, in a Tuesday research note.

Which stocks are in focus

Facebook Inc. shares (FB) were rising more than 2% in premarket trade Tuesday after the social-media giant unveiled its cryptocurrency, Libra coin, offering users the ability to make payments on the internet.

Which data are in focus?

A report on new housing starts showed that builders started new homes at a pace of 1.269 million in May, the Commerce Department said Tuesday (https://www.census.gov/construction/nrc/pdf/newresconst.pdf). They applied for permits at a seasonally adjusted annual 1.294 rate. Economists surveyed by MarketWatch had forecast a pace of 1.23 million starts and 1.30 million permits.

How are other assets trading?

Hong Kong's Hang Seng Index rose 1% and China's Shanghai Composite Index inching up less than 0.1%. Japan's Nikkei 225 fell 0.7%, while in Europe, the Stoxx Europe 600 headed 1% higher after Draghi's comments.

Meanwhile, the 10-year Treasury note touched a 21-month low at 2.02%, while the comparable German debt , known as the bund, was trading around a record-low yield at negative 0.313%. Bond prices and yields move in the opposite direction.

West Texas Intermediate crude futures were gaining late-morning, gold futures bounded higher even as the U.S. dollar bucked up against the euro, with the ICE U.S. Dollar index climbing 0.2% at 97.74.

(END) Dow Jones Newswires

June 18, 2019 10:28 ET (14:28 GMT)

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