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Stock Market News for Nov 25, 2019

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Wall Street gained moderately on Friday and posted their first weekly decline in more than four weeks after investors were disappointed with the lack of any substantial development on the U.S.-China trade front. Although there was an array of positive comments from both countries, traders chose to shrug off the talks and focus on actual progress. In addition, reports of U.S. regulators cutting off government telecommunications funds for Chinese companies like Huawei and ZTE didn’t quite boosted investor sentiment.

The three major indexes— the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite — finished in the green on Friday. Dow hit 27,875.62 after gaining 0.4%, the S&P 500 finished at 3,110.29 after adding 0.2% and the tech-laden Nasdaq Composite closed at 8,519.88 after increasing 0.2%.

The fear-gauge CBOE Volatility Index (VIX) declined 6% to close at 12.34 on Nov 22. Finally, advancers outnumbered decliners on the NYSE by a 1.69-to-1 ratio.

U.S.-China Trade Worries Linger

After reports surfaced that the much-awaited trade deal between the United States and China may not be concluded by the end of this year, President Donald Trump on Nov 22 told Fox News that the agreement was “potentially very close.”

The president added that the United States had a very good chance to make the deal, which lifted investor sentiment to an extent on Friday. Earlier in the day, Chinese President Xi Jinping had said that Beijing wanted to work toward a trade agreement with the United States but wasn’t afraid to “fight back.”

Keeping up with the friendly tone the Asian country had adopted in the past few days, Jinping also told a visiting U.S. business delegation that China had a “positive attitude” toward the trade negotiations.

FCC Cuts Government Funding for Equipment from Huawei, ZTE

U.S. regulators labelled Chinese telecom giants Huawei and ZTE “national security threat” and voted to cut off government funding for equipment. On Nov 22, the Federal Communications Commission (FCC) voted unanimously to prevent American telecommunications companies from using government subsidies to buy equipment from the two Chinese companies.

This order will most likely affect small U.S. companies, as larger American telecom organizations do not use equipment from Huawei or ZTE. In order to replace the existing equipment, the FCC has asked for suggestions on how to financially help these rural telecom firms. In fact, bills in Congress have proposed to set $700 million-$1 billion aside for the purpose.

Huawei issued a statement Friday that the FCC order was unlawful and repeated that there was no proof of the company posing a security risk. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Weekly Roundup

For the week ended Nov 22, major U.S. market indexes cut short their upward movement. The Dow ended 0.5% lower, breaking a month-long winning streak, per the Dow Jones Market Data. The S&P 500 lost 0.3%, marking an end to six weeks of gains and the Nasdaq ended 0.3% lower, snapping out of a seven-week movement forward.

Investor sentiment was largely marred last week by conflicting reports on the U.S.-China trade development. Some positive third quarter earnings reports by notable retailers such as Walmart Inc. (WMT - Free Report) , Target Corporation (TGT - Free Report) and Ross Stores, Inc. (ROST - Free Report) did boost traders’ spirits, however, the undertone remained largely pessimistic as possibility of a trade deal by the end of this year remained bleak.  

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