After The Close
The stock market got off to a weak start this morning, reversed course at midday and through much of the afternoon, but sold off into the close. Equities have been quite volatile over the past couple of days, with investors monitoring the strained trade negotiations taking place between the United States and China. Needless to say, the path has been bumpy lately, with China showing some reluctance to move forward, and President Trump responding with threats of additional tariffs. The two sides are set to meet tomorrow, and no doubt, Wall Street will be paying attention to the situation. At the end of trading, the Dow Jones Industrial Average was ahead roughly two points, while the S&P 500 Index was off five points, and the NASDAQ was lower by 20 points. Market breadth showed a divided session, with advancers about even with decliners on the NYSE. From a sector perspective, healthcare and consumer stocks held up well, while the technology and utility issues came under some pressure.
It was a light day for economic news, but the pace will pick up dramatically tomorrow. Specifically, the latest weekly initial jobless claims are due to be released. We will also get a look at the monthly Producer Price Index, a report on wholesale inventories, and the most-recent trade figures. Elsewhere, in the corporate arena, first-quarter earnings season is still ongoing. Among large names, Walt Disney (DIS – Free Walt Disney Stock Report) weighs in with its report after the close today.
Technically, the stock market has pulled back over the past few sessions. The S&P 500 Index is now near its 50-day moving average, located around the 2,860 level. Looking ahead, while corporate profits remain a key area of concentration, traders will be quite interested in the developments overseas.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell
Then, the threats increased and became more serious, apparently, when a Friday deadline was imposed. The stock market, which would close largely mixed on Monday, saw the Dow drop more than 350 points within the first hour of trading yesterday. In all, as we entered the second hour of a skittish session on Wall Street, the Dow was still off more than 300 points; the S&P 500 was lower by 35 points; and the NASDAQ was down by 108 points. There were few places to hide. A brokerage house downgrade of Boeing (BA – Free Boeing Stock Report) only made matters worse for that stocks and the market in general.
Meanwhile, unlike the case on Monday, equities did not rebound as the morning progressed, and afternoon trading got under way. Instead, the situation worsened, with the Dow and the NASDAQ pulling back even more sharply, so that as we entered the final 90 minutes of trading, the blue-chip composite was lower by almost 600 points and the NADAQ had plunged by more than 200 points. All 10 of the major equity groups and 30 of the 30 Dow issues were lower. Worse, with a reasonably good earnings season now in the rearview mirror, to a large extent, there was no place to hide.
Essentially, the Administration wants China to come to the bargaining table, and quickly, as it is threatening to impose a 25% tariff on $200 billion in goods produced in China by this Friday. It also is raising the possibility of levying a 25% tariff on another $325 billion in such goods later on. The stock market, which has been on a bullish tear so far this year, has been propelled forward by a more accommodative range of policies by the Federal Reserve Board and by growing hopes that a sustainable trade détente will be fashioned with China. The first policy still seems securely in place; the second, now is in some doubt.
The selloff intensified still further down the homestretch, before a solid dose of buying came in during the last few minutes. That late comeback helped to pare the Dow's deficit from session-worst 650-drop in the Dow Industrials to a somewhat less dramatic, though sizable nonetheless, deficit of 473 points. The other averages improved modestly, as well. Even so, when all the tallies were in, the Dow, as noted, still had shed 473 points; the S&P 500 had lost 48 points; and the NASDAQ was lower by 160 points. Anyway one slices it; this was a tough day for the bulls.
Now, the test will be to turn this mini-break around. So, to see what the new day might hold, we look to Asia, where the leading indexes were sharply lower in trading overnight. In Europe, meantime, the Continent's bourses are now pushing a bit downward. Elsewhere, yields on U.S. Treasury notes, which closed off at 2.45% yesterday, are now at 2.44%, and oil prices, off sharply yesterday, are edging lower so far this morning. Finally, U.S. equity futures are moving downward, after an earlier attempted comeback, as we await live trading this morning.
