U.S. stocks traded lower Tuesday afternoon, reversing morning gains, as hopes for a resolution of the U.S.-China trade fight began to fade, despite encouraging comments by President Trump on Monday, while fears of a global economic slowdown mount.
How are the major benchmarks faring?
The Dow Jones Industrial Average DJIA, -0.43% fell 76 points, or 0.3%, at 25,809, while the S&P 500 index SPX, -0.36% was down 7 points at 2,870, a 0.2% fall. The Nasdaq Composite index COMP, -0.50% retreated 24 points, or 0.3%, to 7,828.
At session highs, the Dow had risen 115.19 points, or 0.6%, the S&P 500 added 20.39 points, or 0.7% and the Nasdaq had gained 23.93 points, or 0.3%.
On Monday, The Dow Jones Industrial Average finished 269.93 points higher, up 1.1%, at 25,898.83, taking back part of a 623-point slide Friday. The S&P 500 rose 31.27 points, or 1.1%, to end at 2,878.38, while the Nasdaq Composite closed at 7,853.74, a gain of 101.92 points, or 1.3%.
What’s driving the market?
U.S. stocks gave up early gains by midsession Tuesday, after recovering Monday from Friday’s sharp sell off when China retaliated against Trump’s import tariffs by imposing new levies and Trump countered by raising U.S. tariffs further.
Monday’s rebound came after President Donald Trump said China signaled in a telephone call that it was ready to return to the negotiating table and officials in Beijing called for a calm resolution. China’s foreign ministry has said though that it is “not aware of” any phone call between China and the U.S. though, and it’s not clear that talks will resume in September as planned.
“I was surprised the market was up earlier today,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab. “We have no reason to believe there’s any new negotiations going on, and there’s no new positive news today.”
Frederick expects choppy markets from now until at least September 1, when the next round of tariffs is slated to begin. “You can just expect there to be a lot of volatility driven by Twitter,” he told MarketWatch.
Han Tan, market analyst at FXTM, in a note, echoed that sense of wariness about Trump’s erratic policy making by tweet.
“Market nerves have been left raw, with the delicate sentiment prompting knee-jerk reactions to every nuance pertaining to the highly unpredictable U.S.-China trade impasse. Until there are clear signs of progress in U.S.-China trade negotiations, risk-aversion will continue to dominate market sentiment, with safe haven assets maintaining their appeal among investors,” Han said in a note.
“Despite the seemingly hopeful commentary, investors are well aware that multiple rounds of trade talks have only led to the current dismal situation, whereby repeated tariff threats have become the norm,” he said.
Read: Are stock-market investors giving up on the ‘Trump put’?
Stocks have been under pressure in August following the renewal of international trade tensions and escalating rounds of tariffs by the U.S. and China. The Dow was down 3.6% in the month-to-date through Monday, while the S&P 500 was off 3.4% and the Nasdaq has pulled back 3.9%.
Fears of a global economic slowdown also remain a factor. Data on Tuesday affirmed that Germany’s economy shrank in the second quarter as weaker exports dragged on growth.
See: Why the global economy may be just one more round of tariffs away from recession
In Tuesday’s U.S. economic data, the Case-Shiller home price index showed home prices rising nationally at 2.1% in June, down from a 2.4% gain the previous month.
Consumer confidence remained elevated, according to the Conference Board’s latest consumer confidence index reading, which fell slightly to 135.1 in August from a revised 135.8 in July. Economists polled by MarketWatch predicted the index would fall to 127.8.
Which stocks are in focus?
Shares of Johnson & Johnson JNJ, +1.89% were up 2.0% midday Tuesday. A judge ruled Monday that the company must pay $572 million for contributing to an opioid-addiction crisis in Oklahoma, far less than the $1 billion many analysts had expected. Johnson & Johnson said it would appeal the judgment.
Shares of J.M. Smucker Co. SJM, -8.49% fell 8.1% Tuesday, after the food-products manufacturer reported second-quarter results that fell short of expectations, while lowering its outlook for fiscal 2020.
How are other markets trading?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -3.63% fell 6.4 basis points to 1.485%, while that of the 2-year yield TMUBMUSD02Y, -0.83% was down 2.5 basis points 1.522%.
Stocks in Asia closed Tuesday mostly higher, with the China CSI 300 000300, +1.36% rising 1.4% and Japan’s Nikkei 225 NIK, +0.96% adding 1%. Hong Kong’s Hang Seng index HSI, -0.06% however, edged 0.1% lower. European stocks were up 0.5%, as measured by the Stoxx Europe 600 index SXXP, +0.63%.
In commodities markets, the price of crude oil CLV19, +0.97% rose 0.3% to about $53.80 per barrel, while the gold prices GCZ19, +1.02% added 1% to about $1553 per ounce.
https://www.marketwatch.com/story/stock-futures-seesaw-as-investors-gauge-trade-fight-economic-data-2019-08-27
2019-08-27 15:33:00Z
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