The Dow Jones Industrial Average and the broader US stock market are having the time of their lives even as the US-China trade war keeps raging on and key economic indicators move in the wrong direction.
The Dow now sits comfortably above the 27,000 point mark, having gained over 10% since the beginning of June.
And market optimists believe that the rally is far from over. In fact, many Wall Street analysts are already talking about the Dow eclipsing 28,000.
The analysts estimate that key components of the index such as chemical company Dow Inc., aircraft manufacturer Boeing, heavy machinery manufacturer Caterpillar, and aerospace player United Technologies will deliver handsome double-digit upside over the coming year. But their estimates are based on one crucial factor – a resolution to the US-China trade war.
The performance these and other Dow components could depend heavily on a deal between Beijing and Washington thanks to the index’s outsized exposure to China. These stocks and the broader stock market have been driven up by the recent ceasefire in the trade war and the agreement that negotiations would resume soon.
However, skeptics warn that the two sides still remain miles apart on longstanding sticking points.
Already, Trump is publicly complaining that China hasn’t increased its purchases of US farm exports as Xi Jinping supposedly promised it would.
However, Bloomberg reports that China denied that it had agreed to increase its US agricultural imports. The report also states that China rejected Trump’s demand to boost purchases of farm goods beyond what the two countries agreed in Argentina last year.