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Market Snapshot: Stocks attempt rebound after trade-inspired rout

Stocks rise Tuesday, but investors remain cautious as ever escalating trade tensions took a heavy toll on stocks Monday. Read More...

Stocks rose modestly Tuesday morning, a day after a sharp escalation in U.S.-China trade tensions triggered the worst day for major indexes since early January.

How are benchmark indexes faring?

The Dow Jones Industrial Average DJIA, +0.65%  added 90 points, or 0.4%, to 25,428, while the S&P 500 index SPX, +0.73%  rose 13 points, or 0.5%, to 2,825. The Nasdaq Composite Index COMP, +0.78% gained 45 points, or 0.6%, to 7,691.

On Monday, The Dow tumbled 617.38 points, or 2.4%, to 25,324.99 and the S&P 500 dropped 69.53 points, or 2.4%, to 2,811.87 on Monday, the worst session for those indexes since Jan. 3. The Nasdaq Composite Index sank 269.92 points, or 3.4%, to 7,647.02, marking its biggest one-day loss for 2019.

What’s driving the market?

The start of the week was marked by a ramp up in trade tensions, after China fired back at U.S. tariffs with retaliatory duties that could reach 25% on $60 billion in annual U.S. exports. That was after the U.S. last week raised tariffs on $200 billion in annual Chinese imports to 25% from 10%, and threatened more following talks that ended Friday between the two countries without a deal.

Investors are worried that an escalating fight between the two could harm the U.S., Chinese and global economies.

Read: Stock-market bears say don’t forget about this yield-curve signal

But some calm appeared to return to markets Tuesday after President Donald Trump said late Monday that it should be clear in “three or four weeks” if a U.S. delegation’s recent trip to China to discuss trade was successful. “I have a feeling it’s going to be very successful,” he added.

Stocks also came off session lows Monday after Trump said he would meet Chinese President Xi Jinping next month at a Group of 20 summit, and that no decision had been made on whether to impose tariffs on another swath of Chinese goods.

Tuesday morning, the president took to Twitter to defend his trade strategy, and mollify U.S. farmers whose exports have collapsed amid the dispute, writing that “When the time is right, we will make a deal with China. My respect and friendship with President Xi is unlimited but, as I have told him many times before, this must be a great deal for the United States or it just doesn’t make any sense.”

The president also kept up public pressure on the Federal Reserve to lower interest rates, as a means to help the U.S. economy cope with the affects of the trade spat.

What’s on the economic calendar?

Small business optimism rose to a four-month high in April, gaining 1.7 points to 103.5, according to the NFIB Small Business Optimism index, released Tuesday morning.

U.S. import prices rose just 0.2% in April, below the 0.7% consensus estimate, according to FactSet. Export prices, meanwhile, rose 0.3% last month.

Investors will look out for a small batch of Federal Reserve officials speaking on Tuesday.

New York Fed President John Williams, speaking in Zurich, said early Tuesday that governments can play a role in changing the post-financial crisis environment where short-term rates are lower than they have been historically.

Kansas City Fed President Esther George is scheduled to speak at the Economic Club of Minnesota in Minneapolis at 12:45 p.m. Eastern and San Francisco Fed President Mary Daly at Northwestern University in Evanston, Illinois, at 6 p.m. Eastern.

Which stocks are in focus?

Apple Inc. AAPL, +0.68% shares are in focus after the Supreme Court ruled Monday that consumers can sue the company for forcing them to buy apps exclusively through the company’s App Store. The stock is up 0.8% in premarket action, though it has fallen 7.5% month-to-date.

Shares of Ralph Lauren Corp. RL, -7.54% fell 3.6% Tuesday, even after the clothing retailer reported first-quarter sales and profits that surpassed Wall Street expectations, while raising its quarterly dividend by 10%.

Abercrombie & Fitch Co. ANF, -2.38% announced Tuesday that Chief Operating Officer Joanne Crevoiserat will leave the company, as the apparel retailer has decided to eliminate the COO role. Shares are unchanged in premarket action Tuesday.

Shares of Comcast Corp. CMCSA, +1.51% could be in focus after the cable giant announced that it has agreed to sell its 33% stake in Hulu in five years to Walt Disney Co. DIS, +1.13% for at least $27.5 billion, while immediately giving up its voting rights over the streaming company.

What are strategists saying?

“U.S. stock futures are bouncing with EU shares this morning as the outlook on trade improved modestly overnight,” wrote Tom Essaye, president of the Sevens Report, in a Tuesday note to clients. “China’s retaliatory tariff deadline of June 1 and Trump’s indecision on the next round of tariffs were received as incremental positives, helping risk assets rise this morning.”

“The next key thing to look for is whether Xi and Trump talk on the phone at some point and try to get talks back on track. However, our concern is that it will require financial stress to create the necessary pressure to get the deal done,” said analysts at Danske Bank, in a note to clients.

How are other markets trade?

Asian markets posted modest losses, while European stocks were trading higher, with the Stoxx Europe 600 SXXP, +0.65% rising 0.6%.

The U.S. dollar DXY, +0.12% inched higher, while gold prices GCM9, -0.24%  stepped back some,

Oil prices CLM9, +0.87% were higher after Saudi Arabia said drones attacked an oil pipeline and that other energy infrastructure suffered attacks, shortly after Yemen’s rebels claimed they had conducted a coordinated drone attack.

See: ‘Sabotage’ attacks on Saudi oil tankers put Strait of Hormuz back in spotlight

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