Stocks End Mixed, But Nasdaq Hits Another New All-Time High

Stocks closed mixed yesterday, but the Nasdaq notched another new all-time high.

Stocks were put on the defensive after it was reported that China is reluctant to commit to a specific amount of ag purchases, and the U.S. is reluctant to remove all tariffs ahead of the formal agreement of the phase 1 trade deal.

But China's Ministry of Commerce said that Vice Premier Liu He, Mr. Lighthizer, and U.S. Treasury Secretary Steven Mnuchin held "constructive discussions" about their concerns.

None of this is new news. But these ongoing unresolved issues are creating a bit of anxiety.

Stocks have steadily marched higher ever since the U.S. and China agreed in principle to a limited phase 1 trade deal. But the ironing out of details has taken longer than expected.

President Trump, just yesterday, said if they don't get a deal, he'll raise tariffs on China even more.

But it's generally believed that each country is looking forward to a deal as both countries will benefit.

Once there is an announcement of a U.S.-China breakthrough, the market will likely breathe a big sigh of relief and rally on the news.

The only thing that could potentially be bigger than the U.S.-China trade deal is a vote on the USMCA trade deal. Since the U.S. exports more than 5 times as much to Canada and Mexico (our two largest trading partners), than to China (our third largest trading partner) – passage of this deal, which apparently have the votes in both the House and the Senate – could send stocks soaring.

And since both parties have expressed their support for this deal, it's believed that with each passing day we're getting closer and closer to a vote.

In the meantime, stocks remain well supported given our strong economy, historic unemployment, near record consumer confidence, low interest rates, and impressive corporate profits.

This was further underscored by yesterday's Housing Starts report which showed an 'upward acceleration' in new starts and permits, with permits soaring to the highest level in 12 years.

The economy looks great, and so does the market.

And many are gearing up for an end of year rally.

What a great way to end a spectacular year!

See you tomorrow,

Kevin Matras

Executive Vice President, Zacks Investment Research

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