MARKET SNAPSHOT: Stocks Erase Early Gains As U.S.-China Trade Tensions Loom

Date : 12/13/2018 @ 5:44PM
Source : Dow Jones News
Stock : FTSE 100 (UKX)
Quote : 6964.8  -3.53 (-0.05%) @ 2:39PM
FTSE 100 share price Chart

MARKET SNAPSHOT: Stocks Erase Early Gains As U.S.-China Trade Tensions Loom

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By Chris Matthews, MarketWatch

Jobless claims fall

U.S. stocks gave back most of their morning gains as of midday Thursday, as investors continue to digest headlines surrounding the potential for a U.S.-China trade deal.

How are the benchmarks trading?

The Dow Jones Industrial Average declined 3 points, or less than 0.1%, to 24,525, while the S&P 500 index fell 6 points or 0.1% to 2,647. The Nasdaq Composite Index traded down 47 points, or 0.7% to 7,049.

At session highs early Thursday, the Dow was up 214 points, the S&P 15 points, while the Nasdaq briefly traded up 56 points.

Read:Here's why frustrated stock-market traders say 'neither bulls nor bears' are in charge (http://www.marketwatch.com/story/stock-markets-repeated-reversals-show-neither-bulls-nor-bears-are-in-charge-2018-12-13)

What's driving the market?

U.S.-China trade concerns remained at fore of investor minds, as they continue to digest headlines from earlier in the week that suggested the Chinese were ready to make significant concessions to their industrial policy and reduce tariffs on imported autos, while President Trump indicated he would intervene in the arrest of Huawei's chief financial officer Meng Wanzhou if it would help ensure a trade deal with China.

The perception of progress was tempered by news late Wednesday (https://www.nytimes.com/2018/12/12/world/asia/michael-spavor-canadian-detained-china.html) that China had arrested a second Canadian diplomat in apparent retaliation for Meng's arrest, while reports surfaced today that President Trump's aids were warning the president that his authority to intervene in the affair is limited.

Read:Trump aides warn against intervening in Huawei case (http://www.marketwatch.com/story/trump-aides-warn-against-intervening-in-huawei-case-2018-12-13)

On Thursday, reports that China has stopped requiring local governments (https://www.scmp.com/economy/china-economy/article/2177856/beijing-no-longer-requires-local-governments-work-made-china) to work toward its "Made in China 2025" strategy, however, have added support to the thesis that China is willing to slow its push to strengthen its high-tech industry at the expense of foreign rival firms.

Traders are also focused on Thursday's jobless claims data, which showed a significant decline in the number of Americans newly applying for unemployment benefits. The statistic, which is a leading indicator for labor markets and the economy, had been rising in recent months, albeit from historic lows.

Investors are also beginning to consider the tail risks associated with special counsel Robert Mueller's investigation of the Trump administration. S&P 500 futures dipped Wednesday evening, after reports (https://www.politico.com/story/2018/12/12/national-enquirers-deal-imperil-trump-1061792) that the National Enquirer's parent company, privately held American Media Inc. had agreed to tell prosecutors everything it knows about President Trump.

What data are in focus?

The Labor Department announced Thursday morning (http://www.marketwatch.com/story/jobless-claims-sink-27000-to-206000-erase-thanksgiving-surge-that-now-seems-a-mirage-2018-12-13) that initial jobless claims fell in the week ended Dec. 8 by 27,000 to 206,000, easing fears that layoffs have been steadily rising.

The government also announced (http://www.marketwatch.com/story/us-import-prices-fall-16-in-november-biggest-drop-in-3-years-2018-12-13) that U.S. import prices fell 1.6% in November, their largest decline in three years, led by the falling cost of oil.

What are the analysts saying?

"Trade tensions between the U.S. and China is the biggest factor creating volatility," of late, Patrick Healey, president of Caliber Financial Partners told MarketWatch.

"Investors are clinging to the recent positive news about trade negotiations, but we won't see the end of this volatility until there is a concrete agreement in place," he warned.

Jobless claims were "much lower than expected following high-side surprises in the previous weeks," Jim O'Sullivan, chief U.S. economist at High Frequency Economics wrote in a note to clients. "This report should lessen fears that the labor market is weakening significantly."

What stocks are in focus?

Shares of General Electric Co. (GE) were in focus Thursday, after the firm announced it would launch (http://www.marketwatch.com/story/ge-shares-surge-9-premarket-on-news-of-new-iot-business-jpmorgan-upgrade-2018-12-13) a $1.2 billion industrial "internet-of-things" company, and after JP Morgan separately upgraded the stock from underweight to neutral. The stock is up nearly 8% Thursday

Aflac Inc. (AFL) stock was up 5.9% Thursday, after the insurer confirmed it is in talks with Japan Post Holdings Co. Ltd. to take a minority stake.

Shares of Delta Air Lines Inc. (DAL) were trading down 4.6% Thursday, after the firm announced 2019 earnings guidance of between $6 and $7 per share, versus the consensus of $6.70, per FactSet.

Coca-Cola Corp. (KO) stock rose 0.5%, even after the company was downgraded to neutral from buy by UBS.

Monster Beverage Corp. (MNST) stock fell 6.5% early Thursday, following UBS's initiation of coverage of the company with a sell rating.

How did the benchmarks fare yesterday?

On Wednesday, The Dow Jones Industrial Average rose 157.03 points, or 0.6%, to end at 24,527.27, while the S&P 500 index advanced 14.29 points, or 0.5%, to 2,651.07. The Nasdaq Composite Index climbed 66.48 points, or 1%, to 7,098.31. (http://www.marketwatch.com/story/asia-stocks-rally-into-a-second-day-with-hong-kong-markets-in-the-lead-2018-12-12)

How are other markets trading?

Stock markets in Asia rose broadly Thursday (http://www.marketwatch.com/story/asia-stocks-rally-into-a-second-day-with-hong-kong-markets-in-the-lead-2018-12-12), with Hong Kong's Hang Seng Index , Japan's Nikkei , and the Shanghai Composite Index all ending the day higher.

In Europe, stocks closed broadly lower (http://www.marketwatch.com/story/italy-stocks-stand-out-in-europe-where-ecb-grabs-the-spotlight-2018-12-13) after investors digested news of the end of the European Central Bank's bond buying program, and as uncertainty around Brexit continued to weigh on sentiment. The Stoxx Europe 600 was down 0.2% and the FTSE 100 closed virtually unchanged.

Crude oil prices are rising Thursday (http://www.marketwatch.com/story/oil-falls-as-opec-production-rise-raises-doubt-about-impact-from-next-years-cut-2018-12-13), while gold was down 0.2% (http://www.marketwatch.com/story/gold-edges-lower-while-record-breaking-palladium-hogs-the-spotlight-2018-12-13) and the U.S. dollar (http://www.marketwatch.com/story/currencies-struggle-for-direction-as-ebc-ends-qe-2018-12-13) advanced 0.1%

 

(END) Dow Jones Newswires

December 13, 2018 12:29 ET (17:29 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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