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Stock market news: December 19, 2019

Emily McCormick

U.S. stocks rose as financial markets largely shrugged off the U.S. House of Representatives’ votes to impeach President Donald Trump. The S&P 500 jumped above 3,200 for the first time ever, and each of the Dow and Nasdaq also rose to fresh record intraday and closing highs.

Here’s where markets settled Thursday at the end of regular equity trading:

  • S&P 500 (^GSPC): +0.45%, or 14.23 points

  • Dow (^DJI): +0.49%, or 137.68 points

  • Nasdaq (^IXIC): +0.67%, or 59.48 points

  • 10-year Treasury yield (^TNX): -1.1 bps to 1.913%

  • Gold (GC=F): +0.3% to $1,483.20 per ounce

The House voted nearly on party lines to impeach Trump for abuse of power and obstruction of Congress. The timing of the subsequent Senate trial remains uncertain, although members of the Republican-controlled chamber are widely expected to decide to acquit Trump.

The proceedings have so far done little to rattle financial markets or consumer confidence, with most investors operating under the assumption that the process will not ultimately see Trump’s removal from office. A muted equity response has been consistent with previous impeachment inquiries, when stocks traded based on fundamentals rather than on political events.

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Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., December 17, 2019. REUTERS/Brendan McDermid
Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., December 17, 2019. REUTERS/Brendan McDermid

To that end, progress in a U.S.-China trade deal remains a closely watched focal point for investors, given its implications for corporate capital expenditures and global supply chains.

On Thursday, China unveiled a fresh set of tariff exemptions for U.S. imports, with the announcement coming less than a week after the two sides announced they had agreed on terms of a phase one trade agreement. The new tariff exemptions cover U.S. chemical and oil products and will take effect for one year starting Dec. 26.

In a regular briefing Thursday, China’s Ministry of Commerce spokesperson Gao Feng said the U.S. and China remain in touch over signing a phase one trade deal. Treasury Secretary Steven Mnuchin told CNBC later in the morning that he was confidence the initial trade deal would get signed in early January.

Jobless claims pull back from two-year high, existing home sales decline

New weekly unemployment claims declined after touching a more than two-year high, the Department of Labor said Thursday.

Initial jobless claims came in at a seasonally adjusted 234,000 for the week ending December 14, down from the prior week’s unrevised 252,000. This, however, was still above expectations for claims to fall further to 225,000, according to Bloomberg-compiled consensus data. The new four-week moving average for new unemployment claims rose by 1,500 to 225,500.

Continuing unemployment claims rose more than expected for the week ended December 7. These climbed to 1.722 million from the prior week’s upwardly revised 1.671 million, and increased above the 1.676 million expected.

Meanwhile, existing home sales fell more than expected in November after rising in October, according to the National Association of Realtors Thursday. Sales of previously owned homes rose to a seasonally adjusted annual rate of 5.35 million during the month, below expectations for 5.44 million. This was down from October’s downwardly revised pace of 5.44 million.

Back to zero

Meanwhile, a number of central banks around the world delivered their final monetary policy decisions of the year Thursday.

The Bank of England’s (BOE) Monetary Policy Committee (MPC) held its bank rate steady at 0.75% in a 7-2 decision, as had widely been expected by economists. It also cut its fourth-quarter GDP growth forecast to 0.1% for the U.K., from 0.2% previously.

The central bank signaled it was still prepared to step in and lower rates in the event that conditions worsen, saying in a statement, “If global growth fails to stabilize or Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected U.K. recovery.”

The two dissenters in the MPC, Jonathan Haskel and Michael Saunders, reiterated their calls from the committee’s last meeting in November for rates to be reduced to 0.5% due to a weak U.K. economy. The MPC has held rates steady at 0.75% since August 2018, leaving room for further accommodation in the case of a chaotic U.K. withdrawal from the EU.

In a separate decision, Sweden’s Riksbank on Thursday raised interest rates out of negative territory for the first time since 2015. In that year, the world’s oldest central bank had become among the first to lower its benchmark interest rate below zero as a move to stimulate growth and inflation in the region.

Central banks in the euro area, Denmark, Switzerland and Japan have since followed suit, and the Bank of Japan kept its own short-term interest rate at -0.1% in its own monetary policy decision Thursday. As of December, some $17 trillion in government bonds around the world traded at negative yields. While many have pointed to negative rates has being effective in encouraging borrowing and buoying growth, others have warned of long-term risks for financial institutions.

The Riksbank decision Thursday brought the key bank rate to 0.00% from -0.25% previously. This was based on the Riksbank Executive Board’s assessment that inflation appeared to be trending close to the bank’s 2% target.

Splitting up has been the predominant trend of the past 10 years.
Splitting up has been the predominant trend of the past 10 years.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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