By Chris Matthews and Mark DeCambre, MarketWatch
Geopolitical uncertainty continues to weigh on stocks
U.S. stock benchmarks on Wednesday morning whipsawed between
modest gains and losses,a day after worries about U.S.-China trade
tensions resulted in the worst daily decline for the Dow in about
four months.
How are the benchmark indexes faring?
The Dow Jones Industrial Average rose 54 points, or 0.2%, to
26,023, the S&P 500 rose 7 points, or 0.2%, to 2,891, while the
Nasdaq Composite Index rose 22 points, or 0.3%, to 7,991.
Opinion:The S&P 500's return the next five years? Zero, says
Mauboussin
(http://www.marketwatch.com/story/the-sp-500s-return-the-next-five-years-zero-says-mauboussin-2019-05-08)
On Tuesday
(http://www.marketwatch.com/story/us-stock-futures-lower-as-trade-tensions-stay-in-the-spotlight-2019-05-07),
the Dow tumbled 473.39 points, or 1.8%, to 25,965.09, suffering its
largest percentage decline since Jan 3, while the S&P 500 index
dropped 48.42 points, or 1.7%, to 2,884.05. The Nasdaq Composite
Index fell 159.53 points, or 2%, to 7,963.76.
The S&P 500 and Nasdaq saw their biggest daily declines
since March 22, according to FactSet data.
Read:The stock market is on pace for its worst month since
December rout
(http://www.marketwatch.com/story/the-stock-market-is-on-pace-for-its-worst-month-since-december-routas-volatility-returns-with-a-vengeance-2019-05-07)
What's driving markets?
U.S. stocks are on track for their longest string of consecutive
daily losses since a five-session skid ended March 8, as
Sino-American tariff tensions have buffeted assets perceived as
risky, catching many investors who had anticipated a tidy pact to
the protracted talks coming to fruition soon.
On Wednesday, a notice in the Federal Register formally laid the
groundwork to raise tariffs on $200 billion of Chinese imports to
25% from 10% early Friday, following through on remarks by U.S.
Trade Representative Robert Lighthizer regarding such a move on
Monday. The prospect of higher tariffs was first raised on Sunday
by President Donald Trump, rattling investors who had anticipated
better progress toward a near-term resolution between the two
superpower.
Read:'China has chosen to retreat' -- the U.S. view as
negotiations reach critical juncture
(http://www.marketwatch.com/story/china-has-chosen-to-retreat-the-us-view-as-negotiations-reach-critical-juncture-2019-05-08)
Trump once again weighed in on the negotiations via Twitter
Wednesday, saying that the Chinese are now "coming to the U.S. to
make a deal," implying they had previously been slow-walking the
negotiations in the hope that Trump would be voted out of office in
2020.
(https://twitter.com/realDonaldTrump/status/1126106540015071232)
(https://twitter.com/realDonaldTrump/status/1126106541004873730)
Read:With Trump threatening to tighten the trade screws, here's
a look at what tariffs have done so far
(http://www.marketwatch.com/story/with-trump-threatening-to-tighten-the-trade-screws-heres-a-look-at-what-tariffs-have-done-so-far-2019-05-06)
Indeed, Beijing has said top trade envoys, including Vice
Premier Liu He, will head to Washington on Thursday to resume
negotiations. U.S. officials had accused Beijing of reneging on its
side of the bargain and threatened to raise tariffs on $200 billion
of Chinese imports to 25% from Friday.
Reuters on Wednesday reported
(https://www.reuters.com/article/us-usa-trade-china-backtracking-exclusiv/exclusive-china-backtracked-on-nearly-all-aspects-of-us-trade-deal-sources-idUSKCN1SE0WJ)
that China's diplomatic contingent attempted to revamp a nearly
150-page draft trade agreement last Friday, as they were reluctant
to agree to signing new trade terms into law, and raising the ire
of U.S. negotiators and perhaps prompting a Sunday tweet from
President Donald Trump, threatening higher import duties
Adding to policy uncertainty, Iran said Wednesday it may cease
compliance
(http://www.marketwatch.com/story/iran-says-it-wont-comply-with-backs-out-of-some-2019-05-08)
with portions of a 2015 nuclear deal it signed with the U.S.,
Britain, France, Germany, China and Russia. Iranian President
Hassan Rouhani said that it would begin stockpiling heavy water and
low-enriched uranium unless non-U.S. signatories take steps to
shield the Iranian economy from Trump-Administration sanctions that
have been crippling its economy.
Also potentially weighing on markets are mixed signs on the
global economy, with new trade data out of China showing imports
rising, but exports unexpectedly falling 2.7%
(http://www.marketwatch.com/story/surprise-drop-in-chinas-exports-in-april-2019-05-07),
suggesting that global economic weakness continues to be a threat
with which U.S. investors must contend.
What are strategists saying?
"Some consolidation was to be expected, given the phenomenal
start of the year," for markets, Eric Wiegand, senior portfolio
manager at U.S. Bank, told MarketWatch, adding that the recent
U.S.-China trade drama provides an opportunity for taking
profits.
He also warned investors the trade dispute is "a phenomenon
where you can't get an edge, because you're just one tweet away
from having your previous posture undermined."
"Traders are in no mood to take a stand right now as the
uncertainties regarding China and Iran take center stage," wrote
Bespoke Investment Group's Paul Hickey in a note.
"The flight to safety has provided a big boost for Treasurys,
re-flattening the yield curve closer to the inversion zone," he
added. "And to think, just three trading days ago, the S&P 500
was flirting with a record high close!"
Which stocks are in focus?
Lyft Inc. shares were in focus after the ride-hailing company
late Tuesday reported quarterly earnings for the first time since
its initial public offering in March. The company reported
first-quarter losses that were wider than expected, but revenue
that topped expectations. The stock fell 4.9% Wednesday
morning.
Opinion: Lyft stops providing key data after IPO, then insults
investors' intelligence
(http://www.marketwatch.com/story/lyft-stops-providing-key-data-after-ipo-then-insults-investors-intelligence-2019-05-07)
Shares of Coty Inc. (COTY) tumbled 5.2% after the company
reported a narrower loss for the fiscal third quarter, ended March
31, than the previous three months, but revenue that fell 10.4%,
below consensus expectations.
McKesson Corp. (MCK) stock rose 3.4% after the supply-chain
management company reported first-quarter earnings above
expectations.
Shares of Wendy's Co. (WEN) rose 1.6% after the fast-food chain
reported first-quarter profits and sales that surpassed Wall Street
forecasts.
Nautilus Inc. (NLS) stock fell 6.4% early Wednesday after the
exercise equipment maker reported a first-quarter loss of 29 cents
per share, versus analysts expectations of just 3 cents per share,
according to FactSet.
TripAdvisor Inc. (TRIP) reported earnings Tuesday evening, with
the company posting first-quarter earnings that beat analyst
expectations, but falling revenue that widely missed forecasts. The
stock fell 15.2%.
Radio-frequency component maker Qorvo Inc. (QRVO) also reported
results Tuesday evening, announcing first-quarter sales and profits
that beat Wall Street expectations. Shares rose 4.3% Wednesday.
Shares of Electronic Arts. Inc. (EA) rose 2.6% after the
videogame maker reported better-than-expected net bookings and
strong fiscal 2020 forecast, late Tuesday.
Shares of Chesapeake Energy Corp. (CHK) rose 1.4% Wednesday,
reversing premarket losses, after the oil and natural gas company
reported a wider first-quarter loss
(http://www.marketwatch.com/story/chesapeake-energys-stock-bounces-into-the-green-as-investors-digest-q1-results-2019-05-08)
and revenue that fell short of expectations. On the positive side,
the company beat forecasts for earnings before interest, taxes,
depreciation and amortization (EBITDA), as production and prices
were above projections.
What's on the economic calendar?
In a light day for economic data, Lael Brainard, member of the
Federal Reserve Board of Governors, delivered a speech on the
central bank's ongoing review of its monetary policy framework,
which the Fed hopes will enable it to better deliver on its mandate
to foster maximum employment that is consistent with price
stability.
How are other markets trading?
In Asia
(http://www.marketwatch.com/story/asian-markets-mixed-as-traders-weigh-us-china-trade-dispute-2019-05-06),
the Shanghai Composite Index fell 1.1%, while the Nikkei 225 , in
its second day from an extended holiday break, declined by a
sharper 1.5%, following a similar drop on Tuesday. European stocks
were mostly lower
(http://www.marketwatch.com/story/europe-markets-higher-as-investors-shake-off-trade-fears-2019-05-08),
with the FTSE 100 index down 0.1%.
Gold was trading higher
(http://www.marketwatch.com/story/gold-at-one-week-high-as-stock-losses-look-to-persist-2019-05-08),
while the U.S. Dollar Index declined
(http://www.marketwatch.com/story/new-zealand-dollar-falls-after-central-bank-cuts-rate-us-dollar-slips-2019-05-08)
and crude oil edged lower
(http://www.marketwatch.com/story/us-crude-oil-climbs-up-from-roughly-one-month-low-as-iran-trade-deal-tensions-tug-at-market-2019-05-08).
(END) Dow Jones Newswires
May 08, 2019 11:12 ET (15:12 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Apr 2024 to May 2024
FTSE 100
Index Chart
From May 2023 to May 2024