Solid Earnings Season And Productive U.S.-China Trade Talks Support Stocks

The major indexes closed modestly higher yesterday to kick off this shortened trading week.

Stocks have put in an impressive performance this earnings season after another quarter of double-digit earnings growth. While it's not over yet, it is winding down with over 80% of the S&P 500 members already reporting.

The market has also been cheering the U.S-China trade talks as optimism grows that a deal will finally get done.

Last week in Beijing, a U.S. trade delegation led by Treasury Secretary Steve Mnuchin, and U.S. Trade Representative Robert Lighthizer, was joined by China's President Xi for high level talks. And this week, a Chinese delegation arrived in Washington for more talks. Deputy meetings are being held in the first part of the week, with high level talks occurring on Thursday and Friday.

So far, all of the recent meetings have been characterized as productive. And both sides hope to emerge from the meetings this week with a memorandum of understanding.

The deadline for a deal is March 1st. But President Trump has already said that he'd be willing to extend the deadline for raising tariffs "if we're close to a deal."

He also mentioned that he expects to meet with President Xi soon. This has people even more optimistic since the two leaders would likely only be meeting if they expected to emerge victorious with a trade agreement. While there's no date and time for this meeting yet, assuming it even happens, the simple fact that the White House has floated this out there, suggests things are going very well.

As I've said before, traders will be listening for any news on how the continued trade talks are going this week.

More good news should mean more gains for stocks.
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