Stocks edge higher a day after Trump strikes deal with Dems

Stocks traded slightly higher Thursday, a day after President Donald Trump struck a deal with Democrats over relief and government funding.

The Dow was up 15 points, the S&P gained 0.1 percent, and the Nasdaq added 0.25 percent.

Stocks also rose slightly Wednesday after Trump signaled his approval for a Democratic plan to package hurricane relief money for Hurricane Harvey to a three-month extension of both government funding and the debt ceiling.

The unexpected agreement between the president and leading Democrats Senate Minority Leader Chuck Schumer and House Democratic Leader Nancy Pelosi implies that Trump could be more willing to compromise on other spending plans. Following the announcement of president’s support, both stocks and U.S. government Treasury yields edged higher Wednesday.

“For the most part, there’s nothing new coming out of D.C.,” said Boston Private chief market strategist Robert Pavlik. “What you’re seeing is a market that’s trying to find its level. On Tuesday there was a lot of movement into defensive areas, while yesterday there was movement back into financials and tech. It’s this tug back and forth.”

In central bank news, the European Central Bank left its benchmark interest rate unchanged and made no reference to the anticipated wind-down of its stimulus program.

President Mario Draghi had said at the last ECB press conference in July that discussions over the future of the central bank’s quantitative easing (QE) program could be expected in “the fall” – prompting many to speculate that he could detail a reduction in September.

Stocks got a boost from a weaker dollar after Draghi’s comments.

The euro’s in recent months have muted both the effects of any modest inflation in Europe, as cheaper imports keep prices in check. The euro rose 0.9 percent against the dollar in Thursday trade to around $1.203, adding to its strong yearly gains.

In other central bank news, several members of the Federal Reserve are scheduled to speak throughout the day. Cleveland Fed President Loretta Mester is set to speak at 12:15 p.m. ET while New York Fed President William Dudley and Kansas City Fed President Esther George will speak later this evening after the closing bell.

Investors will also be watching for any movement in U.S. Treasury yields as the central bank leaders offer commentary. Yields rose Wednesday after the surprising debt ceiling deal in Washington, but slipped slightly Thursday ahead of the Fed speakers. The yield on the U.S. 10-year Treasury note sat slightly lower at 2.087 percent, below the critical threshold of 2.1 percent.

In global markets, the South Korean Kospi index rose 1.14 percent as attention surrounding North Korea’s latest nuclear tests subsided for the moment. The rise in the index follows five consecutive session declines.

On the data front, the Labor Department said on Thursday that nonfarm productivity, which measures hourly output per worker, rose at a 1.5 percent annualized rate. Productivity was previously reported to have increased at a 0.9 percent pace in the April-June period. It grew at a 0.1 percent rate in the first quarter.

Thomas Franck

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