Opening Comment — May 17, 2019
DJIA: 25,862.68
S&P 500: 2,876.32
Nasdaq Composite: 7,898.05
U.S. futures are pointing to a lower open Friday amid perceived escalations in the lingering trade dispute between the U.S. and China. The Dow and S&P 500 are both off 0.8% in pre-market action. The Nasdaq 100 is trading 1.0% below fair value on the GLOBEX.
Overnight, a report from Reuters revealed the Chinese state media blames the U.S. for the escalating trade tensions and suggested that any further negotiations may be meaningless unless U.S. leaders start making concessions. The comments follow President Trump’s decision to essentially ban Huawei from doing business with U.S. companies without prior government approval. Yesterday, stocks extended gains for a third consecutive session as a strong batch of corporate quarterly reports and better than anticipated economic updates provided a tailwind to equity markets. On the data front, a preliminary reading from the University of Michigan is expected to show that consumer sentiment levels remained steady in May from the prior month. A separate update is anticipated to reveal the Leading Indicators index increased by 0.2% in April.
In earnings news, NVIDIA is losing 0.8% to $158.94 after the chipmaker topped analyst earnings expectations but revealed it will no longer provide forward guidance. Shares of Applied Materials are climbing 1.4% to $42.25 after the manufacturer topped Wall Street revenue projections.
In Asia overnight, the Shanghai Composite lost 2.5% while the Shenzhen Composite tumbled 3.3% as investors assessed the latest trade updates. In Europe, the STOXX 600 is off 0.7% while Germany’s DAX is losing 1.2%. The FTSE 100 is declining 0.4% following reports Brexit negotiations have stalled.
Midday Comment — May 17, 2019
DJIA: 25,865.24, up 2.56
S&P 500: 2,871.09, down 5.23
Nasdaq Composite: 7,859.78, down 38.26
Stocks have pared early session losses Friday as investors assess the latest economic data and trade updates. The Dow is up 2 points, while the S&P 500 is down 0.2%. The Nasdaq Composite is losing 0.5%.
Overnight, a report from Reuters revealed the Chinese state media blames the U.S. for the escalating trade tensions and suggested that any further negotiations may be meaningless unless officials in Washington start making concessions. The comments follow President Trump’s decision to essentially ban Huawei from doing business with American companies without government approval. An additional update today stated that the U.S plans to remove steel and aluminum tariffs on Canada and Mexico.
The Industrials and Energy sectors are lagging near mid-session. Deere & Co is falling 5.6% to $137.89 after missing earnings estimates and cutting its forward guidance amid uncertainty from the ongoing trade dispute. In other earnings, Applied Materials is climbing 4.6% to $43.59 after topping Wall Street revenue projections.
On the data front, a preliminary reading from the University of Michigan showed consumer sentiment is at a 15-year high in May. A separate update revealed the leading economic index increased by 0.2% in April, in-line with consensus estimates. Amid the data updates, Treasuries are mixed along the curve with the yield on the 10-year note off one basis point to 2.39%. In commodities, WTI crude is gaining 0.7% to $63.33/barrel.
Breadth is negative on issues by 2:1 on the NYSE and 9:5 on the Nasdaq. Composite NYSE Volume is more than 1.1 billion shares.
Closing Comment — May 17, 2019
DJIA: 25,764.00, down 98.68
S&P 500: 2,859.53, down 16.80
Nasdaq Composite: 7,816.29, down 81.76
Stocks finished lower Friday as trade headlines overshadowed positive economic data updates. The Dow fell 98 points to cap a weekly loss of 0.7%. The S&P 500 lost 0.6%, while the Nasdaq Composite declined 1%. For the week, the S&P 500 slipped 0.8% while the Tech-heavy Nasdaq retreated 1.3%.
Speculation of stalled trade negotiations between the U.S. and China weighed on investor sentiment. This followed a Reuters report that revealed the Chinese state media blamed the U.S. for the escalating trade tensions and suggested that any further negotiations may be meaningless unless officials in Washington start making concessions. Losses were capped, however, as an additional update showed the U.S plans to remove steel and aluminum tariffs on Canada and Mexico.
On the data front, a preliminary reading from the University of Michigan showed consumer sentiment is at a 15-year high in May. A separate update revealed the leading economic index increased by 0.2% in April, in-line with consensus estimates. Amid the data updates, Treasuries were mixed along the curve with the yield on the 10-year note off one basis point to 2.39%.
Ten of 11 S&P 500 sectors ended in negative territory with the trade sensitive Industrials group lagging. Deere & Co fell 7.7% to $134.82 after missing earnings estimates and cutting its forward guidance amid uncertainty from the ongoing trade dispute. Energy stocks also underperformed as WTI crude lost 0.2% to $62.75/barrel.
Breadth was negative on issues by 4:1 on the NYSE and 5:2 on the Nasdaq. Composite NYSE Volume was more than 3.2 billion shares.