By Mark DeCambre, MarketWatch , Joy Wiltermuth
Mnuchin says U.S. was '90% of the way there' on China trade
deal
U.S. stocks clawed back some of the previous day's loss in trade
Wednesday as semiconductor shares scored a bounce from Micron
Technologies's late-Tuesday quarterly results.
Comments from U.S. Treasury Secretary Steven Mnuchin suggesting
that a Sino-American trade deal had been close, also triggered some
modest buying on Wall Street.
The Dow Jones Industrial Average was up 67 points, or 0.25%, to
26,616, the S&P 500 ) advanced 4 points, or 0.15%, at 2,921,
while the Nasdaq Composite Index climbed 44 points, or about 0.55%,
to 7,926.
Mnuchin told CNBC
(https://www.cnbc.com/2019/06/26/mnuchin-says-us-china-trade-deal-is-90-percent-complete.html)
that Beijing and Washington had come near to a deal on tariffs. "We
were about 90% of the way there (with a deal) and I think there's a
path to complete this," he told the financial network in
Bahrain.
The U.S. Treasury Secretary said he was "hopeful" that a deal
could be struck as the market awaits a sideline conversation
between President Donald Trump and Chinese President Xi Jinping at
the Group of 20 gathering in Osaka, Japan, which kicks off on
Friday.
But optimism over the prospects for a trade war detente faded
somewhat tempered during the session.
"I am not optimistic of anything of significance to be achieved
for the meetings in Japan this week," said Mariann Montagne, a
portfolio manager at Gradient Investments, in a telephone
interview.
"Mnuchin or members of his team have used that phrase several
times over the past several months," she told MarketWatch. "I think
people are getting too excited."
In April, the Treasury secretary said U.S.-China trade talks
were in the "final laps
(https://www.nytimes.com/2019/04/28/us/politics/mnuchin-china-us-trade-negotiations.html)."
Separately, President Trump, appearing on Fox Business on
Wednesday said that he was happy to collect China tariffs
(http://www.marketwatch.com/story/trump-today-president-threatens-tariffs-on-china-as-he-jokes-draghi-should-lead-fed-2019-06-26)
if talks broke down.
Concerns about escalating trade tensions between the China and
the U.S., the world's largest economies, have fed a sense of rising
uncertainty about the health of the global economy, at least partly
contributing to central banks across the world signaling a
willingness to reinstitute a fresh wave of economic stimulus.
"Certainly, when we came in pre-open, futures were higher on the
Mnuchin comments," said Sahak Manuelian, an equities trader at
Wedbush Securities.
"It seems things are starting to fall off a bit."
On Tuesday, equity markets suffered one of the worst declines in
about a month, led by a selloff in trade-sensitive technology
shares, after the S&P 500 index last week saw a new record
high. Even with yesterday's slide, the Dow Jones Industrial Average
stands about 1% shy of its Oct. 3 record, while the tech-heavy
Nasdaq Composite Index is within reach of its May 3 all-time
closing high, despite giving up 121 points, or 1.5%, in the prior
session.
Tuesday's slump in stocks came after Federal Reserve Chairman
Jerome Powell, speaking at the Council on Foreign Relations in New
York, signaled that an interest-rate cut in July is not a done
deal, emphasizing that the central bank was still monitoring the
economy and "grappling" with signs of weakness while wantint to
avoid a knee-jerk reaction.
What's more, St. Louis Fed President James Bullard said he was
not advocating an aggressive cut of 50 basis point in federal-funds
rates when the Fed meets next month.
Wall Street currently has the chances of an interest rate cut in
July at 100%, according to the CME Group's FedWatch tool.
Read: Fed's Bullard says he is not in favor of half point rate
cut in July
(http://www.marketwatch.com/story/feds-bullard-says-he-is-not-in-favor-of-half-point-rate-cut-in-july-2019-06-25)
Check out: Powell says the Fed is 'grappling' with whether to
cut interest rates
(http://www.marketwatch.com/story/powell-says-the-fed-is-grappling-with-whether-to-cut-interest-rates-2019-06-25)
"Positioning ahead of the G20 summit meeting between Trump and
Xi could see investors want skin in the game ahead of what many
feel could yield a very positive outcome," said Edward Moya, senior
market analyst at brokerage Oanda, in a daily research note.
"A reset of talks is likely becoming the base case scenario and
if we see a timeline put in place, we could see equities resume the
march towards uncharted territory," he said.
U.S. economic data published Wednesday was again weak, with
durable-goods orders for May dropping 1.3%, weighed down by Boeing
Co.'s (BA) woes from its grounded 737 MAX jets.
Check out: Durable-goods orders drop 1.3% in May, but business
investment picks up in reassuring sign
(http://www.marketwatch.com/story/durable-goods-orders-drop-13-in-may-but-business-investment-picks-up-in-reassuring-sign-2019-06-26)
A separate report on international trade in goods also showed
the U.S. trade deficit climbed 5.1% for the same month which was
wider than expected.
Read: U.S. trade deficit in goods widens 5.1% to $74.5 billion
in May
(http://www.marketwatch.com/story/us-trade-deficit-in-goods-jumps-51-to-745-billion-in-may-2019-06-26)
Market participants may also be partly watching for any response
from the White House after reports indicated that Special Counsel
Robert Mueller will testify
(http://www.marketwatch.com/story/robert-mueller-to-testify-before-house-panels-on-july-17-2019-06-25)before
the House Judiciary and Intelligence committees on July 17.
Democrats have been wanting to hear from Mueller personally,
regarding his investigation into Russian interference in the 2016
election as well as possible obstruction of justice by President
Donald Trump.
Which stocks are in focus?
Shares of Apple Inc.(AAPL) were in focus after the iPhone maker
and tech giant acquired autonomous-driving startup Drive.ai
(http://www.marketwatch.com/story/apple-buys-autonomous-car-startup-driveai-reports-2019-06-25),
according to multiple reports. Apple confirmed the deal to both
Axios and the San Francisco Chronicle
(https://www.sfchronicle.com/business/article/Drive-ai-a-self-driving-car-startup-once-worth-14047625.php).
Shares of Apple were up nearly 5% on Wednesday.
Micron Technology Inc. shares (MU) rose 13% on Wednesday after
the memory-chip maker's results topped expectations
(http://www.marketwatch.com/story/micron-stock-surges-after-hours-as-earnings-top-lowered-expectations-2019-06-25)
for the quarter, and executives forecast improvement in the fourth
quarter.
That was good news for other semiconductor companies. Shares of
Advanced Mico Devices(AMD) climbed more than 4%; Nvidia Corp.
almost 9% and shares of exchange-traded semiconductor fund iShares
PHLX Semiconductor ETF (SOXX) climbed 1.8%.
Shares of Boeing (BA) were up more than 2% on Wednesday.
Consumer goods giant General Mills(GIS) shares fell more than
5%, a day after it reported disappointing sales for its fiscal
fourth-quarter
(http://www.marketwatch.com/story/general-mills-stock-falls-after-profit-beats-but-sales-come-up-short-2019-06-26).
Shares of retailer Big Lots(BIG) gained 3% after the retailer
said it would appoint former Abercrombie & Fitch veteran
Jonathan Ramsden as chief financial officer in August.
FedEx Corp(FDX) shares bumped up more than 2% a day after it
beat earnings estimates
(http://www.marketwatch.com/story/fedex-shares-tick-down-after-earnings-beat-2019-06-25).
(END) Dow Jones Newswires
June 26, 2019 13:39 ET (17:39 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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