Wall Street Jumps on Contradictory Trade News
17-Jan-19 16:20 ET
Dow +162.94 at 24370.10, Nasdaq +49.77 at 7084.48, S&P +19.86 at 2635.92
briefing.com
[BRIEFING.COM] The S&P 500 gained 0.8% on Thursday, boosted by a Wall Street Journal report indicating the U.S. is considering lifting some, or all, of the tariffs on Chinese imports while trade negotiations continue.
The Dow Jones Industrial Average gained 0.7%, the Nasdaq Composite gained 0.7%, and the Russell 2000 gained 0.9%.
All 11 S&P 500 sectors jumped on the news and finished in positive territory. The trade-sensitive materials (+1.7%) and industrial (+1.7%) sectors led the advance.
It was a relatively muted session prior to the release of the report, which was published around 2:40 p.m. ET. The S&P 500 traded between a loss of 0.4% at its low and a gain of 0.2% at its high.
According to the article, Treasury Secretary Steven Mnuchin suggested lifting tariffs with the aim of advancing talks and winning China's support for longer-term reforms. The report, however, also mentioned that U.S. Trade Representative Robert Lighthizer had pushed back, arguing that any concession could be seen as a sign of weakness.
The news propelled the S&P 500 from a gain of 0.2% to a gain of 1.1%. It also sent the benchmark index well above its 50-day moving average (2626.72) for the first time since Dec. 4.
The market would retrace a good portion of the knee-jerk gains on a follow-up report that said a Treasury spokesperson informed CNBC by email that no recommendations have been made on the tariffs.
Despite the contradictory reports, this will be viewed as an interesting development because it gave market participants (and President Trump) a quick glimpse at the type of reaction that would presumably ensue on news of an actual trade deal. To that end, the S&P 500 jumped nearly 20 handles in a span of about ten minutes on just a suggestion that a proposal was made to lift tariffs temporarily.
The stock market ultimately ended the session on an upbeat note as buyers pushed up prices in the final hour and kept the S&P 500 above its 50-day moving average on a closing basis.
The Philadelphia Semiconductor Index (+1.1%), whose components derive a decent amount of revenue from China, took the news in stride. On a related note, Taiwan Semiconductor (TSM 36.29, +0.65), an Apple (AAPL 155.86, +0.92, +0.6%) supplier, gained 1.8% despite issuing a first quarter revenue warning.
In other earnings news, Morgan Stanley (MS 42.53, -1.96) reported top and bottom line results that were below consensus estimates for the fourth quarter. The stock fell 4.4% on the disappointing results, but it was not enough to bring down the red-hot financial sector (+0.5%), which is now up 7.2% this month.
U.S. Treasuries edged lower, pushing the 2-yr yield and 10-yr yield higher by two basis points each to 2.56% and 2.75%, respectively. The U.S. Dollar Index was flat at 96.06. WTI crude lost 0.6% to $51.99/bbl.
Reviewing Thursday's economic data, which included the weekly Initial and Continuing Claims report and the Philadelphia Fed Index for January:
- Initial claims for the week ending January 12 decreased by 3,000 to 213,000 (Briefing.com consensus 221,000) while continuing claims for the week ending January 5 increased by 18,000 to 1.737 million.
- The key takeaway from the report is that the low level of initial claims continues to reflect a solid labor market.
- The Philadelphia Fed Index for January jumped to 17.0 (Briefing.com consensus 10.5) from 9.1, paced by an eight-point pop in the new orders index to 21.3 that was the highest reading in six months.
- The key takeaway from this report was the indication that 46% of firms expect increased activity over the next six months while only 15% are projecting a decline.
Looking ahead, investors will receive Industrial Production and Capacity Utilization for December and the preliminary reading of the University of Michigan Index of Consumer Sentiment on Friday.
- Russell 2000 +8.8% YTD
- Nasdaq Composite +6.8% YTD
- S&P 500 +5.2% YTD
- Dow Jones Industrial Average +4.5% YTD
You are in our thoughts and prayers Gottfried.... get that blood pressure under control and come back ready to show me how to do this job right! RtS |
