S&P 500 Gains After Trade Selloff
June 20 2018 - 4:54PM
Dow Jones News
By Riva Gold and Amrith Ramkumar
-- Stocks stabilize following Tuesday drop
-- Treasury yields rise
-- Walgreens, 21st Century Fox among best performers
U.S. stocks stabilized a day after trade tensions rattled
markets around the world.
The S&P 500 ended a three-session streak of declines, buoyed
by gains in shares of real-estate firms, and the tech-heavy Nasdaq
Composite closed at a fresh record.
Investors this week have been more seriously considering the
chance that the world's two largest economies could embark on a
growth-hindering trade war, but many still expect the two countries
to ultimately dial down their plans and reach a compromise. Some
investors have been encouraged that large companies continue to
oppose protectionist trade policies that could hurt their global
businesses.
Stocks, commodities and bond yields fell Tuesday after President
Donald Trump called for his administration to identify $200 billion
in Chinese goods for a fresh round of tariffs.
"Our base case is this gets walked back...but it's getting more
serious now," said Tim Courtney, chief investment officer at
Exencial Wealth Advisors. "The longer it goes on and the further we
go down this path, the greater the chances are that this could
actually stick."
The S&P 500 added 0.2%, with eight of its 11 sectors
notching gains, while the Nasdaq rose 0.7%. The Dow Jones
Industrial Average closed down 42 points, or 0.2%, at 24658 in a
seventh straight session of losses -- its longest streak since
March 2017.
Some investors aren't sure that trade tensions will escalate,
and major indexes have tended to stabilize following initial drops
as the trade fights have escalated.
Analysts were weighing news that Germany's leading auto makers
have thrown their support behind the abolition of all import
tariffs for cars between the European Union and the U.S. in an
effort to find a peaceful solution to the brewing trade war.
Despite recent trade fears and anxiety about higher interest
rates, some investors think steady earnings growth will boost
stocks moving forward.
"I'm not too worried," said Chris Bertelsen, chief investment
officer of Aviance Capital Management. "If it turns out to be the
great trade wars of the 1930s, I will be wrong, but that's a
position we're willing to take."
The yield on the benchmark 10-year U.S. Treasury yield edged up
to 2.928% from 2.893%. Yields rise as prices fall. Federal Reserve
Chairman Jerome Powell said at the European Central Bank's annual
policy conference Wednesday that sturdy U.S. economic growth has
built a strong case for continuing to gradually lift interest
rates.
Walgreens Boots Alliance was among the S&P 500's best
performers, adding 5.3% following news that it would be added to
the Dow Jones Industrial Average, replacing General Electric.
Shares of 21st Century Fox rose 7.4% after Fox and Walt Disney
announced a new merger agreement, increasing the value of the deal
and adding a cash component. Fox and Wall Street Journal owner News
Corp share common ownership.
PayPal shares also climbed after the company agreed to acquire
financial-technology company Hyperwallet Systems Inc. for about
$400 million.
Among decliners, shares of Starbucks fell 9.1% after it said it
would close 150 U.S. stores in its 2019 fiscal year, while Oracle
dropped 7.4% after it warned currency conversions would weaken the
company's quarterly performance.
Elsewhere, the Stoxx Europe 600 added 0.3% to snap a
three-session losing streak, with bank shares among the best
performers.
Earlier, Japan's Nikkei Stock Average rose 1.2% and Hong Kong's
Hang Seng advanced 0.8%, after both indexes tumbled on Tuesday.
Write to Riva Gold at riva.gold@wsj.com and Amrith Ramkumar at
amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
June 20, 2018 16:39 ET (20:39 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.