WEDNESDAY – U.S. stocks were lower Wednesday as worries over U.S.-China trade relations dampened sentiment around a record-setting rally.
The Wall Street Journal reported, citing former Trump administration officials, that the ongoing trade talks could hit an impasse that would derail a so-called “phase one” trade deal. Uncertainty around trade also grew after the Senate passed a bill supporting Hong Kong protesters. This led China to accuse the U.S. of interfering in domestic affairs.
The Dow pulled back from record highs on Tuesday amid losses from Boeing and Home Depot while investors monitored earnings and developments in the U.S.-China trade talks. There is lingering uncertainty among investors about the possibility of a deal between both countries, despite comments last month suggesting they were close to signing a partial agreement.
Elsewhere, investors are awaiting minutes from the Federal Reserve’s October policy meeting at 2 p.m. The U.S. central bank decided to lower the federal funds rate by 25 basis points to a range of 1.5% to 1.75% late last month.
In corporate news, Target shares jumped more than 8% in the premarket after the retailer posted quarterly results that easily beat expectations. Target also raised its full-year profit outlook.
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– U.S. stock index futures indicated a flat open Thursday
as a move to record highs took a pause amid persisting worries around
U.S-China trade relations.
At 8:20 a.m. ET, Dow Jones Industrial
Average futures slipped 37 points, pointing to a decline of 21 points at
the open. The 30-stock average closed at an all-time high in the
previous session. Futures on the S&P 500 — which also eked out a
record closing high on Wednesday — and Nasdaq 100 both fell marginally.
between the U.S. and China are thought to have hit a snag over
agricultural purchases. The Wall Street Journal reported on Wednesday
that Beijing is resisting requests from the White House to curb tech
transfers as well as enforcement mechanisms. China is also reportedly
wary about committing to specific farm purchases from the U.S.
Ministry of Commerce spokesman Gao Feng said overnight that both
countries are holding “in-depth” discussions about a phase one deal, but
noted that the rolling back of some tariffs is key to reaching an
On the data front, the latest weekly jobless claims
will be released at around 8:30 a.m. ET. The Labor Department is poised
to report its producer price index (PPI) for October at the same time.
around 10 a.m. ET, Federal Reserve Chair Jerome Powell will testify
before the House Budget Committee on the economic outlook.
– Stocks slipped on Wednesday as investors digested mixed
news around U.S.-China trade talks along with testimony from the
highest-ranking Federal Reserve official.
The Dow Jones
Industrial Average traded lower a fraction of a percent. The S&P 500
dipped 0.3% while the Nasdaq Composite also slid 0.3%.
S&P 500 and Nasdaq both notched intraday records in the previous
session. The Dow came within a hair of its all-time high on Tuesday.
U.S. and China are reportedly at loggerheads over tariffs as they seek
to conclude phase one of their trade deal. The Wall Street Journal
reported Tuesday night, citing people familiar with the talks, that the
impasse is on whether the U.S. should remove existing tariffs or would
only cancel duties that are set to take effect on Dec. 15.
Fed Chairman Jerome Powell will address the Congressional Joint
Economic Committee later in the day. In prepared remarks, he said the
path of Fed interest rates is unlikely to change as long as the economy
On the data front, the U.S. consumer price index rose more than expected in October. The index increased by 0.4% last month, the Labor Department said. Economists polled by Reuters expected a gain of 0.3%.
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U.S. stock index futures were lower Monday amid lingering U.S.-China trade worries while protests in Hong Kong escalate.
7:30 a.m. ET, Dow Jones Industrial Average futures were down 118
points, indicating a loss of 136 points at the open. S&P 500 and
Nasdaq 100 were also lower.
decline would knock the major averages from record levels reached last
week. The Dow notched its eighth record close of the year on Friday
while the S&P 500 closed at an all-time high for the 19th time. The
Nasdaq, meanwhile, posted a record close for the 14th time in 2019.
President Donald Trump said Friday he had not agreed to roll back tariffs on China. Those comments came after the Chinese commerce ministry said that both sides had agreed to cancel existing tariffs in phases. A U.S. official also reportedly said both sides agreed to roll back the tariffs in tranches.
stock market’s recent move to record highs comes in part because of
improving sentiment around U.S.-China trade talks. With his comments on
Friday, Trump dampened trade expectations in the market.
FRIDAY – Stocks hovered around the flatline on Friday but remained on track for solid weekly gains after trade optimism sparked a massive rotation out of bonds and lifted equities to record levels.
The Dow Jones Industrial Average traded 38 points lower, or 0.1%. The S&P 500 slid 0.1% while the Nasdaq Composite climbed 0.3%.
Disney was among the best-performing stocks on Wall Street after the company released its latest quarterly figures. Health care was the best-performing sector in the S&P 500, gaining 0.4%.
The major averages were poised to extend their weekly winning streaks despite Friday’s muted performance amid an improving tone around global trade
The Dow is up 1.1% week to date. The S&P 500 and Nasdaq Composite are up 0.6% and 0.8%, respectively, for the week. It would be the third straight week of gains for the Dow while the S&P 500 headed for its fifth straight weekly gain. The Nasdaq was on pace for a six-week winning streak.
Sentiment was also boosted this week by corporate earnings results that have generally beaten expectations. Of the 425 S&P 500 companies that have reported thus far, 74% have beaten estimates.
FRIDAY – U.S. stock futures pointed to a little changed open on Friday following a record-setting session for the major stock indexes.
Around 7 a.m. ET, Dow Jones Industrial Average futures were unchanged but pointed to a gain of 33 points at the open. S&P 500 and Nasdaq 100 futures pointed to a flat open.
The small implied gain for the Dow comes after Disney shares jumped more than 5% on great earnings. Disney’s revenues for its media and networks segment topped estimates, while sales for the company’s parks, studio entertainment and direct-to-consumer businesses also beat expectations.
Stocks rose to record highs on Thursday after the world’s two largest economies reportedly agreed to remove existing trade tariffs, sparking a huge rotation into equities and out of bonds. The U.S. 10-year Treasury yield jumped more than 15 basis points at one point on Thursday, its biggest upward move since the 2016 election.
The increasingly positive tone around global trade put the major indexes on track for solid weekly gains. Entering Friday’s session, the Dow is up 1.2% week to date. The S&P 500 and Nasdaq Composite are both up 0.6% for the week through Thursday’s close. It would be the third straight week of gains for the Dow while the S&P 500 headed for its fifth straight weekly gain. The Nasdaq was on pace for a six-week winning streak.
On the data front, consumer sentiment figures are due out at 10 a.m. ET, as well as wholesale trade numbers.
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Shares of Roku plunged Thursday as the streaming devices company
posted third-quarter results that missed Wall Street’s expectation after
multiple quarters of blowout growth.
Roku reported a third-quarter loss of 22 cents a share, worse than
the 18 cents a share loss analysts surveyed by FactSet expected. Roku
had beaten analysts’ expectations for quarterly earnings in seven of its
last eight reports.
“ROKU broke a string of 2019 beats reporting a
mixed 3Q and a frankly surprisingly mixed 4Q despite its (temporary)
leadership position in the distribution of Disney+,” Pivotal Research
analyst Jeffrey Wlodarczak said. “We are not surprised by the …
decline indication in the stock in the after-market as an undeniably
rich 12+X ’20 revenue multiple simply does not leave a lot of room for
anything but material beats.”
Pivotal has a sell rating on Roku
with a $60 price target. RBC Capital similarly pointed out Roku’s
advantage as a distributor, as it get revenue from the streaming
services of Apple, Disney, Amazon and Netflix. But unlike Wlodarczak,
RBC’s Mark Mahaney has an outperform rating on Roku, as he sees it “as
one of the best plays on ad-supported” over-the-top services, saying
“the Streaming Wars catalyst isn’t showing up in the numbers yet, but we
continue to believe ROKU will benefit materially.”
U.S. stock index futures turned sharply
higher Thursday after China said the world’s two largest economies had
agreed to remove existing trade tariffs.
Around 8:30 a.m. ET, Dow
Jones Industrial Average futures were up 154 points, implying an
opening gain of 138 points. S&P 500 and Nasdaq 100 futures also
pointed to solid gains.
The gains put the Dow and S&P 500 on track to reach fresh record highs at the open.
Feng, a ministry spokesperson for China’s Commerce Ministry, said that
both sides had agreed to simultaneously cancel some existing tariffs on
one another’s goods, according to the country’s state broadcaster. The
ministry spokesperson said that both sides were closer to a so-called
“phase one” trade agreement following constructive negotiations over the
past two weeks.
One important condition for a limited trade
agreement, Feng insisted, was that the U.S. and China must remove the
same amount of charges at the same time.
On the data front, the latest weekly jobless claims numbers came in at 211,000, down slightly from 218,000 in the previous week.
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– Stocks were set to open higher on Tuesday, following a
record close in the previous session, as investors grew more bullish on a
potential U.S.-China trade deal as both sides consider more rollbacks
Futures on the Dow Jones Industrial Average rose 70
points and indicated a positive open of more than 58 points, while
futures on the S&P 500 and Nasdaq Composite were also higher. Major
averages are on track for a third straight positive session.
is pushing President Donald Trump to remove more tariffs on about $125
billion worth of Chinese goods imposed in September as part of the
“phase one” trade deal, Reuters reported Monday evening. A U.S. official
told Reuters the fate of the Dec. 15 tariffs is being considered as
part of negotiations.
Strong earnings, more promising economic
data and optimism over a resolution on trade with China drove the Dow to
all-time highs on Monday, following the S&P 500 and Nasdaq’s new
records last week.
The Dow’s year-to-date gain now stands at
around 18%, while the S&P 500 is up more than 22% and the Nasdaq
more than 27% so far this year.
Traders will also have eyes on a raft of economic data Tuesday morning. September balance of trade, import and export figures are due for release at 9:30 a.m. ET before November Redbook data at 9:55 a.m. ET.
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