U.S. stocks rose on Thursday, led by energy companies and a rebound in financials, but gains were kept in check by cautious trading ahead of the Trump-Xi meeting and on uncertainty about quick U.S. fiscal stimulus.
President Donald Trump and his Chinese counterpart, Xi Jinping, start their two-day meeting later in the day, and top of the agenda is the possibility of Trump using U.S.–China trade ties to pressure Beijing to do more to rein in North Korea’s arms program.
The meeting comes amid rising doubts about Trump’s ability to deliver on his pro-growth promises, such as tax cuts. U.S. House of Representatives speaker Paul Ryan said on Wednesday that the tax reform bill could take longer than the stalled healthcare bill.
“The market can still go higher, but they need to make sure that everything the market has gone up on so far is coming to pass,” said Neil Massa, senior equity trader at Manulife Asset Management in Boston.
“And that means making sure Republicans are able to do the pro-business agenda that they put out there.”
At 12:35 p.m. ET, the Dow Jones Industrial Average was up 47.17 points, or 0.23 percent, at 20,695.32; the S&P 500 was up 5.86 points, or 0.25 percent, at 2,358.81; and the Nasdaq Composite was up 14.58 points, or 0.25 percent, at 5,879.06.
Nine of the 11 major S&P sectors were higher, led by the energy index’s 0.8 percent rise following higher oil prices.
But the biggest boost was from financials. The index was up 0.57 percent after a four-day losing streak.
“The markets still look strong, but they are massively overbought and we do have bank earnings beginning to come in next week. That will tell the real tale for the sector,” said Phil Davis, chief executive of PSW Investments.
As corporate earnings reports start trickling in, investors are also cautious given the lofty valuations. The S&P 500 index is trading at about 18 times forward earnings estimates, above its long-term average of 15.
L Brands jumped 10.4 percent after reporting a smaller-than-expected drop in March sales.
Among the laggards was Amazon, which fell about 1 percent, set for its first drop after eight sessions, in six of which it hit record highs.
AMD sank nearly 8 percent after Goldman Sachs started overage with a “sell” rating.
Advancing issues outnumbered decliners on the NYSE by 2,045 to 767. On the Nasdaq, 1,727 issues rose and 1,004 fell.
The S&P 500 index showed five 52-week highs and four lows, while the Nasdaq recorded 22 new highs and 55 new lows.