U.S. stocks closed mostly lower after making small moves in and out of positive territory Thursday as investors continued to fret over the lack of clarity and progress in U.S.-China trade talks.
On the domestic front, President Donald Trump again criticized the Federal Reserve’s effort to normalize monetary policy.
How did the benchmarks fare?
The Dow Jones Industrial Average (DOW:DJIA) bucked the trend to finish with a gain 70.11 points, or 0.3%, 24,597.38, after rallying more than 200 points at the session high. The S&P 500 index (S&P:SPX) edged down 0.53 point to end at 2,650.54 and the Nasdaq Composite Index (AMERICAN:COMP) shed 27.98 points, or 0.4%, to close at 7,070.33.
What drove the market?
U.S.-China trade concerns remained at the fore of investors’ minds amid signs that the Chinese were ready to make significant concessions to their industrial policy and reduce tariffs on imported autos. Trump also indicated that he would intervene in the arrest of Huawei’s chief financial officer Meng Wanzhou if it would help ensure a trade deal with China.
The perception of progress was tempered by news late Wednesday that China had arrested a second Canadian national in apparent retaliation for Meng’s arrest, while reports surfaced that Trump’s aides were warning the president that his authority to intervene in the affair is limited.
On Thursday, reports that China has stopped requiring local governments to work toward its “Made in China 2025” strategy, however, have added support to the thesis that China is willing to slow its push to strengthen its high-tech industry at the expense of foreign rival firms.
Trump also said in an interview with Fox News that he hopes the Fed “won’t be raising interest rates anymore.” It was Trump’s latest criticism of the central bank, which is scheduled to meet next week to determine its interest rate policy. Economists projected that the Fed is likely to raise its benchmark rate by a quarter-point to a range between 2.25% and 2.5%.
Which data were in focus?
The Labor Department announced Thursday that initial jobless claims fell in the week ended Dec. 8 by 27,000 to 206,000, easing fears that layoffs have been steadily rising.
The government also said that U.S. import prices fell 1.6% in November, their largest decline in three years, led by the falling cost of oil.
What were analysts saying?
“Trade tensions between the U.S. and China is the biggest factor creating volatility,” Patrick Healey, president of Caliber Financial Partners told MarketWatch. “Investors are clinging to the recent positive news about trade negotiations, but we won’t see the end of this volatility until there is a concrete agreement in place,” he said.
Jobless claims were “much lower than expected following high-side surprises in the previous weeks,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics, wrote in a note to clients. “This report should lessen fears that the labor market is weakening significantly.”
What stocks were in focus?
Shares of General Electric Co . (NYS:GE) rallied 7.3% after the firm announced it would launch a $1.2 billion industrial “internet-of-things” company, and after JPMorgan separately upgraded the stock from underweight to neutral.
Aflac Inc . (NYS:AFL) stock gained 6.6% after the insurer confirmed it is in talks with Japan Post Holdings Co. Ltd. to take a minority stake.
Shares of Delta Air Lines Inc. (NYS:DAL) fell 4.8% after the airline announced 2019 earnings guidance of between $6 and $7 a share.
Monster Beverage Corp. shares slumped 7% following UBS’s initiation of coverage of the company with a sell rating.
Shares of Amazon.com Inc. (NAS:AMZN) slid 0.3% after the online retailer said Whole Foods, which it owns, is severing ties with delivery service Instacart Inc., which could result in around 240 Instacart employees getting laid off.
How were other markets trading?
Stock markets in Asia rose broadly, with Hong Kong’s Hang Seng Index (HONG:HK:HSI) , Japan’s Nikkei (NIKKEI:JP:NIK) , and the Shanghai Composite Index (SHG:CN:SHCOMP) all ending the day higher.
In Europe, stocks closed lower after investors digested news of the end of the European Central Bank’s bond buying program, and as uncertainty around Brexit continued to weigh on sentiment.