Stocks Up As Trade Talks Still On Track
Stocks closed higher yesterday as trade talks continue to move forward.
As the rhetoric from both the U.S. and China has escalated, their respective negotiating teams have been hard at work trying to put the final details of a phase one trade agreement on paper.
Between China's demand that all tariffs be lifted, and President Trump's suggestion that maybe we should just wait until after the election for a deal, traders have grown a bit more cautious.
But both countries, contrary to some sharp exchanges, have expressed a desire to get a phase one trade deal done.
And quite frankly, since China has been hurt much worse than the U.S. during this trade stand-off (the U.S. economy is the envy of the world right now, while China's economy is growing at the slowest pace in nearly 30 years), it's believed that China really does want and need to make a deal.
And while the USMCA trade deal looks like it will have to wait until early next year (January?), there's little doubt it'll be brought to a vote soon, and that it should easily pass the House given its strong bipartisan support.
In other news, the ADP Employment Report came in far less than expected with 'only' 67,000 new private payroll jobs vs. expectations for 156,000. This report always comes out two days before the government's official Employment Situation report, which is predicting 170,000 private payroll jobs (180K if you include the public payroll as well). But given ADP's spotty track record of predicting what the government report will say, it was quickly dismissed.
We also got numbers from the service sector. The ISM Non-Manufacturing Index came in at 53.9. That was down from last month's 54.7 and views for 54.5, but remained well above the '50' threshold. The PMI Services Index, however, increased to 51.6 vs. last month's 50.6. That missed expectations for 51.6, but it was another improvement, and also another print above the '50' mark, which shows expansion.
Today we'll get Weekly Jobless Claims, and Factory Orders.
And then tomorrow, we'll get the Employment Situation Report, and Consumer Sentiment.
In the meantime, our economy looks great. And so does the market.
We just came off of a fantastic earnings season where stocks soared.
But there's plenty more where that came from, even with earnings season coming to a close, if you know where to look. So be sure to read our latest commentary...
Big Profits As Earnings Season Ends
Best,
Kevin Matras
Executive Vice President, Zacks Investment Research
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