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Nov. 14, 2019, 4:23 p.m. EST

S&P 500 index edges up to new record close but euphoria about U.S - China trade deal fades

Cisco shares tumble after disappointing outlook

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By Chris Matthews, MarketWatch , Clive McKeef


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Walmart shares are in focus.

The U.S. benchmark S&P 500 stock index managed to close at a new record Thursday, but the Dow and Nasdaq indexes slipped as the euphoria about an imminent U.S - China trade deal, supporting the five week rally, began to fade.

Technology stocks fell, led down by a slump in Cisco Systems Inc. after the company issued a bleak outlook with its earnings report, blaming customer uncertainty based on international trade disputes, Hong Kong unrest and Brexit.

How are major indexes trading?

The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.01% slipped 1.63 points, or 0.01%, to 27,781.96, while the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.0073% ended up 2.59 points, or 0.08%, at 3,096.63. The Nasdaq Composite index /zigman2/quotes/210598365/realtime COMP +0.20% declined 3.08 points, or 0.04%, to 8,479.02.

On Wednesday, the Dow rose 92.10 points, or 0.3%, to end at a record 27,783.59, while the S&P 500 squeezed out a gain of 2.2 points, or 0.1%, to finish at 3,094.04, to also mark a record finish. The Nasdaq Composite  missed out on a record of its own, falling 3.99 points, or less than 0.1%, to close at 8,482.10.

What’s driving the market?

The prospect of a U.S. - China trade deal remains the main factor sustaining a rally that has pushed U.S. stocks record highs in the past five weeks.

”Right now we’re treading water on trade,” Sam Stovall, chief investment strategist at CFRA told MarketWatch. “Most of the recent gains are related to optimism on trade because if we look at earnings, they’re down 1% year-over-year in the third quarter and expected to be down again in the fourth.”

Trump administration officials are frustrated that China has not offered enough concessions to justify a reduction in US tariffs on Chinese goods, a longstanding demand from Beijing that has become further entrenched in recent weeks, according to the Financial Times. 

Earlier the Chinese Commerce Ministry said the U.S. and China were holding “in-depth” discussion on the partial trade agreement, emphasizing that the cancellation of tariffs was important to concluding a deal, according to Reuters.

However, Trump administration officials on Thursday confirmed China has ended a ban on American chicken, paving the way for the U.S. to export more than $1 billion in poultry and poultry parts to the Asian country.

The Wall Street Journal reported on Wednesday that U.S.-China talks had hit a snag over farm purchases, with Beijing balking at committing to a hard number in the text of the agreement while President Donald Trump has claimed China agreed to buy $50 billion of products a year.

Read: The stock market heads to record heights even as the Trump impeachment hearings enter new phase — here’s why

Meanwhile, Federal Reserve Chairman Jerome Powell on Thursday told the U.S. House Budget Committee that the weakness in the manufacturing sector has not spilled over into the broader economy. On Wednesday before the Joint Economic Committee, Powell reiterated that the Fed would need to see a material change in conditions to move policy.

However, St Louis Fed president, James Bullard, said Thursday that the “key risk” facing the U.S. economy is a sharper-than-expected slowdown, despite the Fed’s recent interest rate cuts. The economy has already been slowing down this year after relatively rapid growth over 2017 and 2018, he noted.

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
28,135.38
+3.33 +0.01%
Volume: 254.81M
Dec. 13, 2019 5:14p
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/zigman2/quotes/210599714/realtime
US : S&P US
3,168.80
+0.23 +0.0073%
Volume: 1.96B
Dec. 13, 2019 5:14p
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/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
8,734.88
+17.56 +0.20%
Volume: 1.98M
Dec. 13, 2019 5:16p
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