After The Close
U.S. stocks began the first session of the week with a solid move to the upside, and the major market indexes held on to close the day with strong gains.
As has been the case throughout the year, the markets continue to react strongly to any developments on the trade situation between the U.S. and China. Stocks took a big hit Friday, following announcements of further tariffs from the two super powers. Today, they regained some of that lost ground after President Donald Trump indicated that China wanted to resume talks. Also, China’s top trade negotiator, Vice Premier Liu He, indicated that he hoped for a calm resolution to the dispute. Meanwhile, on the economic front, the Commerce Department announced that orders for durable goods were up 2.1% in July, nearly double consensus expectations.
At the closing bell, the Dow Jones Industrials were up 270 points (1.1%), the broader S&P 500 Index finished ahead by 31 (1.1%), and the tech-heavy NASDAQ fared the best of the lot, tacking on 102 points (1.3%).
All 10 of the major market sectors were showing green at the end of the day, led by consumer cyclicals (up 1.1%), technology (+1.1%), and utilities (+0.9%). Basic materials shares were the laggards on the session, gaining just over a quarter percent.
Elsewhere, light sweet crude was down nearly three-quarters of a percentage point, to around $53.80 a barrel. The commodity has shed about 4.2% in value over the past month, and is down more than 21% since a year ago. Lastly, the major European bourses also had an up day, with France’s CAC-40 and Germany’s DAX both up a little under half a percent, while the U.K. market was closed for a holiday.
– Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell
Wall Street comes to work on Monday after an unsettling week that saw major moves, up and down.
Friday was a particularly volatile session that was influenced by several notable events. Before the market opened, China announced a set of retaliatory tariffs on U.S. goods designed to match the timeframe of tariffs set to take hold on imports from China.
That put a damper on sentiment, as Wall Street for quite some time has been hoping that trade issues with China would be settled. Instead, the escalation raised concerns that a global economic slowdown now developing would accelerate.
Assurances from the Federal Reserve that it would act appropriately to keep the nation’s long-running business expansion going lifted spirits later in morning, though. The Fed was meeting at Jackson Hole, Wyoming for its annual informal get-together. Although not a policy meeting per se, the central bank took the opportunity to let all parties concerned that it stands ready to lower interest rates, if necessary.
But stocks ultimately swooned badly when the White House issued words to the effect that it sought a pullback of U.S. companies from China and promised further punitive actions.
Those actions came after the closing bell in the form of increases in existing and planned tariffs on goods from China.
The corresponding downshift in prospects for global growth influenced trading in the bond market and in the pricing of various industrial commodities, as well as stocks.
The yield on the benchmark 10-year Treasury note fell to a slim 1.52% at day’s end (prices rise when yields fall). The yield was above 3.00% in late 2018, when economic prospects were brighter.
Oil prices dipped, as well, with the price per barrel falling 2%, to $54.17 for the West Texas Intermediate blend.
Gold was a winner, with investors driving up quotations by a hefty $29.30 an ounce, to $1,526.60. This year’s rally in the gold market has been impressive, as investors move in an asset class seen as defensive.
Over the weekend, the markets were signaling further weakness, with stocks in Asia down sharply in response to Friday’s slump in U.S. equities. Ongoing unrest in Hong Kong was another negative.
President Trump subsequently indicated at a G-7 meeting in France that talks with China might resume, though, leading to a tentative turnaround to the upside in stock futures.
– Robert Mitkowski
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
