After The Close
Wall Street began the day to the upside, but prices quickly dipped into the red after renewed fears over U.S./China trade relations and impeachment talk.
During a speech at the United Nations, President Donald Trump criticized China, accusing its leaders of currency manipulation, the theft of intellectual property, and product dumping. However, the two nations are still set to renew talks next month, and Trump expressed hope that they could reach an agreement that was beneficial for both. Meanwhile, the market was also rattled by comments from U.S. House Speaker Nancy Pelosi, which hinted at possible impeachment proceedings against the President. The potential for an inquiry escalated following recent allegations that Trump threatened to hold back aid to Ukraine, in connection with Democratic candidate Joe Biden’s run for office in 2016.
Elsewhere, the Conference Board’s latest findings didn’t help matters any. Namely, its consumer confidence index for September plummeted to a reading of 125.1, from a downwardly revised 134.2 in August. This represented the biggest drop in nine months, and was well below consensus expectations. Lastly, new data from the S&P Case Shiller home-price index showed that home price increases in July slowed to their slowest pace in seven years.
At the closing bell, the 30-stock Dow Jones Industrial Average (which at one point was down was down as much as 245 points) ended the day with a loss of 141 points. The broader S&P 500 was off by 25, while the NASDAQ fared the worst of the lot, shedding 118 points, or 1.5%. Performance among the 10 major market sectors was mostly negative, with the biggest losses coming from technology (down 1.6%), energy (-1.5%), and basic materials (-1.5%). Unsurprisingly, the best performing group was utilities, which tend to be defensive by nature, with stocks there rising 0.8%.
Elsewhere, oil prices lost ground, with light sweet crude down 2.8%, to around $57 a barrel. The move followed reports that Saudi Arabia was recovering from the attacks on its production facilities more quickly than expected. Still, the U.S. benchmark is down more than 21% year over year due to rising concerns about a potential slowdown in demand while supplies rise.
Sentiment on the major European bourses was also negative, as a positive start gave way to afternoon selling. The UK’s FTSE 100 took the biggest hit, falling nearly half a percentage point, while Germany’s DAX shed about one-third of a percent. France’s CAC 40 held on to end just below breakeven.
– 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
After a mostly constructive fortnight of trading to start the month of September (the main U.S. averages still stand within a stone’s throw of their all-time highs), investors have been taken on a rollercoaster ride in recent sessions. The major equity indexes have seen intra-day swings in the direction of trading. Prompting the daily gyrations are concerns about the ongoing trade dispute between the United States and China and its impact on the health of the global economy, as well as a spike in geopolitical tensions in both the Middle East and Hong Kong. The Middle East situation involves recent drone attacks by Iran on Saudi Arabian oil processors and threats of more attacks. The fighting in the Middle East has led to increased volatility in oil prices. These fears have been matched by some recent encouraging reports on the U.S. economy, including strong housing figures last week, and the ongoing accommodative monetary policies both here and abroad. The Federal Reserve cut interest rates last week, and the European Central Bank and the Peoples Bank of China have announced stimulus plans in an effort to jump start slowing economic growth amid the ongoing trade dispute.
Much like last Friday, investors were taken on a choppy ride yesterday. The major equity averages started the session to the downside on more geopolitical tensions in the Middle East and a report showing a notable slowdown in manufacturing activity in the euro zone. That data, which included a sharp decrease in Germany’s PMI, were yet another sign that the global economy is weakening. The euro zone, much like parts of Asia, has suffered from the ongoing trade war between the world’s two largest economies. After the sharp selling to start yesterday’s session, the equity indexes stabilized, and then retraced those initial losses and then some, trading in positive territory for a notable stretch, before the sellers returned and the mood on Wall Street soured late in the day. But unlike Friday, the late-day selloff was not notable. For the day, the Dow Jones Industrial Average (+15 points) finished nominally higher, while the NASDAQ (minus five points) was modestly lower and the broader S&P 500 Index was essentially flat, falling less than one point.
Overall, yesterday’s session was rather mixed, with the split between up and down arrows among the 10 major equity groups nearly even, and the spread between winning and losing issues quite thin on both the New York Stock Exchange and the NASDAQ. There were slightly more advancers on the Big Board, while the opposite held true on the NASDAQ.
Meantime, the new trading day stateside is looking like it will begin to the upside. The main indexes in Asia finished slightly higher overnight, while the major European bourses, after a down showing yesterday, are trading modestly to the upside as trading moves into the back half of the session on the Continent. Helping equities around the global were comments from the Trump Administration on the ongoing trade negotiations (or lack thereof) with China. Specifically, U.S. Treasury Secretary Steven Mnuchin confirmed U.S./China trade talks will resume next month. This is prompting some equity buying around the globe, but it should be noted that unlike past months, the positive comments on trade talks did not lead to a notable spike in investors’ appetite for riskier assets. In recent weeks, any positive sentiment on trade has been quickly counterbalanced by increasing concerns about slowing global growth, which only intensified with yesterday’s dour report on manufacturing activity in the euro zone.
Speaking of the business beat, investors will be interested in the latest reading on U.S. consumer confidence from the Conference Board (due at 10:00 A.M. (EDT) today). This will give the investment community a sense of how the U.S. consumer is feeling with the start of the all-important holiday shopping season now just two months away from commencing. The confidence data may prompt traders to give the consumer discretionary stocks a closer look this morning.
– William G. Ferguson
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
