By Sue Chang and Chris Matthews, MarketWatch
Strong Walmart earnings help to prop up the Dow
U.S. stocks edged higher Tuesday following a three-day weekend
as another round of U.S.-China trade talks begin in Washington. The
market's gains were led by the consumer staples and materials
sectors.
What are major benchmarks doing?
The Dow Jones Industrial Average rose 10 points to 25,894 and
the S&P 500 index gained 4 points, or 0.2%, to 2,779. The
Nasdaq advanced 15 points, or 0.2%, to 7,488.
What's driving the market?
Gains last week were fueled in part by upbeat expectations
surrounding U.S.-China trade negotiations held in Beijing. Talks
are set to resume this week in Washington, sparking hopes that the
two sides can continue to make progress toward a deal.
President Donald Trump on Sunday tweeted about the trade talks,
saying "Big progress being made on soooo many different
fronts!"
(https://twitter.com/realDonaldTrump/status/1097103477329649664)
Investors appeared to pay little attention to Trump's
declaration of a national emergency to pay for a wall along the
U.S.-Mexico border. Sixteen states filed a federal lawsuit
(http://www.marketwatch.com/story/california-leads-16-us-states-in-lawsuit-against-trumps-wall-emergency-declaration-2019-02-19)
on Monday challenging the declaration.
Even as the Trump administration seeks a resolution to the
standoff over U.S.-China trade relations, investors are also being
forced to weigh the implications of a new study submitted Sunday
(http://www.marketwatch.com/story/commerce-dept-submits-auto-tariff-recommendation-to-trump-but-details-not-disclosed-2019-02-17)
to the White House by the Commerce Department that proposes the
imposition of new tariffs on auto imports on national security
grounds.
The recommendations contained in the report have yet to be made
public, and administration has 90 days to decide whether to
implement the study's proposals.
Cleveland Federal Reserve Bank President Loretta Mester told an
audience Tuesday
(https://www.clevelandfed.org/en/newsroom-and-events/speeches/sp-20190219-transitions-the-economy-monetary-policy-and-policy-communications.aspx)
at the University of Delaware that she expects economic growth and
job growth to slow this year compared with last, but that she
expects growth to be strong enough that the fed-funds rate "may
need to move a bit higher than current levels."
The National Association of Home Builders monthly confidence
index rose 4 points to a seasonally adjusted rate of 62 in February
(http://www.marketwatch.com/story/home-builder-confidence-jumps-in-february-to-four-month-high-2019-02-19),
a four-month high, the association said.
What are analysts saying?
"We've had a market that has priced in a lot of good news,"
Marvin Loh global macro strategist at State Street, told
MarketWatch, adding that markets rallied recently on optimism
surrounding trade talks.
"This could be one of those buy the rumors sell the fact sort of
situations," in which much of the trade-talk related gains for
stock markets are already in the rearview mirror, he said.
"After the boost received from upbeat headlines with regards to
last week's U.S.-China trade talks, risk appetite eased somewhat,
with negotiations set to continue in Washington this week," wrote
Charalambos Pissouros, senior market analyst with JFD Brokers, in a
note. "Concerns over a potential escalation between the U.S. and
the EU with regards to auto tariffs may have been one of the
reasons behind the slightly softer investor morale."
What stocks are in focus?
Shares of Dow component Walmart Inc. (WMT) were up 3.5% after
the retailer reported fourth-quarter earnings and revenues
(http://www.marketwatch.com/story/walmart-shares-rise-after-earnings-and-revenue-beats-expectations-2019-02-19)
that surpassed Wall Street expectations, while raising its annual
dividend by 2%.
Advance Auto Parts Inc. (AAP) shares slid 0.6% after the firm
reported fourth-quarter profits
(http://www.marketwatch.com/story/advance-auto-parts-beats-profit-expectations-but-same-store-sales-miss-2019-02-19)
that topped analyst forecasts but saw same-store sales growth fall
short.
Shares of Medtronic plc(MDT) rose 0.6% after the medical device
manufacturer reported fiscal third-quarter profits and sales
(http://www.marketwatch.com/story/medtronic-beats-profit-and-sales-expectations-2019-02-19)
that beat analysts' forecasts.
Weight Watchers International Inc. (WTW) shares dropped 3.1%
after the stock was downgraded to underweight from neutral at J.P.
Morgan, which also cut its price target on the stock to $25 from
$37.
How are other markets trading?
Stock markets in Asia ended mixed, with Japan's Nikkei 225
edging 0.1% higher, while China's Shanghai Composite Index lost
0.8% and Hong Kong's Hang Seng Index fell 0.4%.
In Europe, stocks were lower
(http://www.marketwatch.com/story/european-markets-struggle-as-investors-respond-to-hsbc-and-bhp-earnings-2019-02-19),
with the Stoxx Europe down 0.2%.
Crude oil prices
(http://www.marketwatch.com/story/us-oil-climbs-on-tightening-supplies-brent-oil-edges-lower-2019-02-19)
and the price of gold () rose while the value of the dollar
(http://www.marketwatch.com/story/dollar-attempts-to-end-2-day-slide-as-us-china-trade-talks-resume-2019-02-19),
relative to its peers, declined.
--William Watts contributed to this report
(END) Dow Jones Newswires
February 19, 2019 13:35 ET (18:35 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.