Wall Street ended lower on Thursday as investors closely watched the G-20 summit in Argentina where President Donald Trump is scheduled to discuss trade issues with his Chinese counterpart Xi Jinping. Meanwhile, the latest Fed minutes confirmed that a rate hike is more or less certain in December. All three major stock indexes finished in the red.
The Dow Jones Industrial Average (DJI) closed at 25,338.84, down 0.1%. The S&P 500 Index (INX) decreased 0.2% to close at 2,737.76. Meanwhile, the Nasdaq Composite Index (IXIC) closed at 7,273.08, declining almost 0.3% or 208.89 points. A total of 6.85 billion shares were traded on Thursday, higher than the last 20-session average of 7.67 billion shares. Decliners outnumbered advancers on the NYSE by 1.08-to-1 ratio. On the Nasdaq, decliners had an edge over advancers by 1.23-to-1 ratio. The CBOE VIX increased 0.6% to close at 18.79.
How Did the Benchmarks Perform?
The Dow ended in negative territory reversing its three-day long winning streak. Notably, eighteen components of the 30-stock blue-chip index closing in the red while remaining twelve closed the green.
The S&P 500 also closed in the red after three-straight winning sessions. The Technology Select Sector SPDR (XLK) and Financials Select Sector SPDR (XLF) were major losers declining 1% and 0.9%, respectively. However, the Materials Select Sector SPDR (XLB) and Energy Select Sector SPDR (XLE) each gained 0.7%. Notably, seven out of total 11 sectors of the benchmark index closed in the green while four finished in the red.
Meanwhile, the tech-heavy Nasdaq Composite reversed its three-day winning run due to weak performance of large-cap tech stocks.
G-20 Summit in Focus
Investors are closely watching the ongoing G-20 summit in Argentina where President Trump is expected to meet Chinese President Xi Jinping. Both sides are likely to try to reach an amicable solution to the eight month old trade-related conflicts which has resulted in several billions of dollars of tariffs imposed on both sides.
However, so far only conflicting reports have been received on this front. On Nov 28, citing U.S. government officials, The New York Times reported that President Trump is looking for a respectable compromise deal with China. Trump is highly concerned about the negative impact of trade war on U.S. economy, particularly on the financial sector.
On Nov 29, The South China Morning Post reported White House advisor Peter Navarro would be attending the dinner between the two Presidents in Buenos Aires at the G-20. Notably, Navarro is an arch critic of Chinese trade practices against the United States especially related to intellectual property rights. Earlier, this month, Navarro said that any deal with China will be on Trump’s terms, a comment which was later denounced by National Economic Council Director Larry Kudlow.
Following news of Navarro’s presence in the dinner meeting, shares of trade-sensitive stocks like Caterpillar Inc. (CAT - Free Report) and NIKE Inc. (NKE - Free Report) declined 0.4%. Caterpillar carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
November FOMC Minutes
Minutes of the Fed’s November meeting indicated that almost all members have supported another rate hike soon, probably in December. However, the central bank is not sure how monetary policy will take shape in 2019 as a series of issues have started influencing policy variables. The statement was in line with Fed chair Jerome Powell’s statement that the interest rate may be close to a neutral level while delivering a speech at the Economic Club of New York on Nov 28.
On Nov 29, the Department of Commerce reported that personal consumption expenditures increased $86.9 billion or 0.6% in October, the highest in seven months. Strong expenditure on prescription drugs, electricity and natural gas propelled total consumer spending. The figure was higher than the consensus estimate of an increase of 0.4%.
For the month of October, PCE (personal consumption expenditure) index grew 0.2%. Year-over-year, PCE inflation remained flat at 2%. The core PCE inflation (excluding food and energy) rose a modest 0.1%, lower than the consensus estimate of 0.2%. Year-over-year, core PCE inflation was 18%, well below the Fed’s target level of 2%. Notably, core PCE inflation is the preferred inflation gauge of the central bank.
Personal income increased $84.9 billion or 0.5% in October. Disposable personal income (DPI) increased $81.7 billion or 0.5%. Personal savings came in at $967.8 billion in October and the personal saving rate (personal saving/disposable personal income) was 6.2%.
The Department of Labor reported that initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 234,000 for the week ended Nov 24. This is the highest level since mid-May and higher than the consensus estimate of 221,000. The four-week moving average of continuing claims rose 19,750 to 1.68 million.
The National Association of Realtors reported that U.S. pending home sales plunged 2.6% to an index reading of 102.1 in October from 104.8 in September, its lowest since June 2014.
Stocks That Made Headline
BD Brings HealthSight Diversion App to Combat Opioid Crisis
Becton, Dickinson and Company (BDX - Free Report) also known as BD, recently launched the HealthSight diversion management application to help hospitals and health systems identify drug diversion. (Read More)
PVH Corp Q3 Earnings Beat, Raises '18 EPS Outlook
PVH Corp. (PVH - Free Report) reported mixed results in third-quarter fiscal 2018, wherein earnings beat estimates while sales missed. (Read More)
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