Stocks Give Up Gains As Report Dampens Trade Deal Optimism

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U.S. stock indexes gave up a midday gain and turned mixed Wednesday afternoon following a report suggesting that talks between Washington and Beijing aimed at delivering a stopgap trade deal have run into obstacles.

The Wall Street Journal reported that the snag centers on a request by U.S. negotiators that China commit to making specific purchases of U.S. farm goods, among other demands.

The newspaper, which cited unnamed people familiar with the matter, had earlier reported that Washington and Beijing are at odds over whether the U.S. will roll back tariffs or merely hold off on going through with a new batch of taxes on Chinese goods due to go into effect on Dec. 15.

President Donald Trump said Tuesday that an agreement on the phase one deal announced last month “could happen soon,” but he warned that he was ready to raise tariffs “very substantially” if that fails.

The market has been sensitive to the twists and turns in the U.S.-China trade conflict. Investors’ expectations about a limited trade deal between the world’s two largest economies has helped drive gains for the stock market the past five weeks.

The late-afternoon dip in the market erased some of the modest gains from earlier in the day, as traders reacted to remarks by the chairman of the Federal Reserve.

Jerome Powell told lawmakers that the central bank is likely to hold off on another interest rate cut, unless the economy shows signs of worsening.

He also expressed optimism about the prospects for the U.S. economy, which he expects will grow at a solid pace, though it still faces risks from slower global growth and trade tensions. Powell’s remarks kicked off two days of testimony by the Fed chief before congressional panels.

Banks fell the most as bond prices rose, dragging down the yields used to set interest rates that lenders charge on mortgages and other loans. Bank of America dropped 1.1% and Wells Fargo fell 1.3%.

Companies that rely on consumer spending also fell. Amazon was down 1.5% and General Motors slid 3.2%. The price of gold rose, another signal that traders were shifting money into traditional safe-haven assets.

Makers of household goods, utilities and real estate companies, sectors seen as less risky, led the gainers. Procter & Gamble rose 1.4%, Edison International gained 2.3% and American Tower was 2% higher.

KEEPING SCORE: The S&P 500 was little changed at 2:53 p.m. Eastern Time. The index set a record high on Friday.

The Dow Jones Industrial Average gained 83 points, or 0.3%, to 27,776. The Nasdaq dropped 0.1%. It hit an all-time high on Tuesday.

Small-company stocks lagged the broader market, sending the Russell 2000 index 0.4% lower.

More stocks fell than rose on the New York Stock Exchange. Stock indexes in Europe finished broadly lower.

POWELL SPEAKS: In a written statement to Congress’ Joint Economic Committee, Powell said Wednesday that the central bank is unlikely to cut rates unless the economy slows enough to cause Fed policymakers to make a “material reassessment” of their outlook.

The Fed cut short-term rates last month for the third time this year, to a range of 1.5% to 1.75%, in a bid to shield the economy from slower global growth and the U.S.-China trade war.

“Most people going in pretty much assumed that the Fed is now on hold,” said Sam Stovall, chief investment strategist at CFRA. “Investors were encouraged that Chairman Powell did not say anything totally out of what was expected.”

Recent data suggests that U.S. economic growth remains solid, if not spectacular. The economy expanded at a 1.9% annual rate in the July-September quarter, down from 3.1% in the first three months of the year. The unemployment rate is near a 50-year low of 3.6% and hiring is strong enough to potentially push the rate even lower.

YIELDS: Treasury yields continued to fall as demand for bonds increased, driving their prices higher. The yield on the 10-year Treasury note slipped to 1.88% from 1.91% late Friday. It was below 1.50% in early September and has been rallying with confidence in the economy’s strength.

MILESTONES APLENTY: The major U.S. stock indexes were within striking distance of more milestones.

The benchmark S&P 500, which has notched weekly highs the past five weeks, has hit new highs 19 times this year, matching 2018’s milestones. The index was within 0.1% of its record high, set Friday.

The Nasdaq, meanwhile, was hovering just 0.2 below the all-time high it set Tuesday.

The Dow, which ended Tuesday unchanged from its record high set the previous day, was holding on to a tiny gain that had it on track for a new milestone Wednesday.

FEELING SECURE: Home and business security company ADT climbed 7.1% after its latest quarterly results topped Wall Street’s expectations. The company also announced a special dividend.

ANALYZE THIS: Datadog vaulted 15.5% after the data analytics and cloud monitoring company reported strong third-quarter earnings and gave investors an encouraging forecast.

QUITE A JOLT: Shares in Energizer Holdings jumped 14.8% after the battery and personal care products maker’s latest quarterly results handily beat Wall Street’s forecasts.

By ALEX VEIGA - Nov 13. 2019

AP

 
 

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