BA Boeing Co

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 69 points, or 0.26%, to 26,617, the S&P 500 ) advanced 6 points, or 0.2%, at 2,923, while the Nasdaq Composite Index climbed 52 points, or about 0.65%, to 7,936.

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."

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 to avoid a knee-jerk reaction.

What's more, St. Louis Fed President James Bullard said he wasn't advocating for an aggressive cut of 50 basis point to key federal-funds futures 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 10% and shares of exchange-traded semiconductor fund iShares PHLX Semiconductor ETF (SOXX) climbed 1.8%.

Shares of Boeing (BA) were up more than 1% on Wednesday.

Consumer goods giant General Mills(GIS) shares fell more than 4%, 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 1% 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 12:36 ET (16:36 GMT)

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