- Dow is on the brink of halting a 6-session win streak powered by gains in tech
- Reports of a fresh round of stimulus from China had underpinned Tuesday’s rise
- Declines in information technology and utilities led the S&P 500 lower midday
U.S. stocks relinquished early gains to turn negative Tuesday afternoon as investors digested a new round of posturing on the U.S.-China trade standoff, along with signs of growing global economic stimulus.
How are benchmarks performing?
The Dow DJIA, +0.16% fell 27 points, or 0.1%, to 26,050, while the S&P 500 index SPX, +0.15% lost 3 points, or 0.1%, at 2,883. The Nasdaq Composite Index COMP, +0.19% retreated 12 points, or 0.2%, to 7,810.
At session highs, the Dow had risen 185.99 points, or 0.7%, the S&P had climbed 23.88 points, or 0,8%. At its peak, the Nasdaq reached 86.83 points higher, a gain of 1.1%
The Dow has risen for six-straight sessions, the longest since an eight-day run that ended on May 14, 2018, according to Dow Jones Market Data.
What’s driving the market?
Wall Street appeared likely to join a global equity surge that analysts attributed to a decision by Chinese authorities to back special-purpose bond issuances by local governments. The move is an effort to accelerate financing of major projects through the bond issuances, which are used largely for infrastructure investment, the People’s Bank of China said in a joint statement with other government agencies, The Wall Street Journal (paywall) reported.
Investors, meanwhile, appeared to ignore a continued rumble of hostile rhetoric from the U.S. and China over trade. China’s foreign ministry on Tuesday said it would respond firmly if the U.S. insisted on escalating trade tensions, Reuters reported, after U.S. President Donald Trump on Monday said further tariffs on Chinese imports would take effect if the two countries don’t reach a deal at a meeting of Group of 20 leaders later this month.
Chinese officials, however haven’t confirmed that President Xi will meet with president Trump at the meeting, to be held June 28-29. President Trump said Monday that if Xi doesn’t meet with him, additional tariffs will be placed on Chinese goods. U.S. Commerce Secretary Wilbur Ross said in an interview on CNBC Tuesday morning that he believes a deal will ultimately be reached, but cautioned investors not to expect a quick resolution.
What’s on the economic calendar?
The National Federation of Independent Business said its Small Business Optimism Index posted a May reading of 105, up 1.5 points from April. Six components of the index rose, three were unchanged and one declined.
The prices of wholesale goods rose 0.1% in May from April, down from the 0.2% rise in the previous month, underscoring the lack of inflation pressures in the U.S. economy, according to the producer-price index data. The increase in wholesale prices over the past year, meanwhile, slowed to 1.8% from 2.2% in April,
What are analysts saying?
China’s move to add more stimulus, “is a sign the pivot isn’t just a U.S. central bank phenomenon and that there is stimulus in the ramping up globally,” said Eric Wiegand, senior portfolio manager at U.S. Bank.
“There’s a lateral move with a positive modest bias,” right now, he said. “We’re still range bound. It wouldn’t be surprising to see more volatility around the G-20 meeting, as investors ask ‘will they or won’t they’” make a deal, he added.
“Yesterday’s global equity market rally has continued into Tuesday, thanks to Asian stocks being led higher by the prospect of new government stimulus in China,” said Russ Mould, investment director at AJ Bell, in a research note.
What stocks are in focus?
Private-equity giant Apollo Global Management LLC APO, +0.27% will acquire the online photo sharing company Shutterfly Inc. SFLY, +0.90% in an all cash deal worth $51 per share, valuing the company at $2.1 billion. Shutterfly stock closed at $50.25 per share, and rose 0.5% Tuesday.
Shares of CVS Health Corp. CVS, -1.60% could be in focus Tuesday, after the New York Post reported that a federal judge appears to be nearing a surprise move to block CVS’ $69 billion acquisition of Aetna, completed last year. The stock fell 1.2% Tuesday.
Shares of H&R Block Inc. HRB, +2.60% rose 1.9% Tuesday, after the tax preparation services company reported fiscal fourth-quarter profit and revenue that beat expectations, boosted its dividend and announced the acquisition of Wave Financial Inc., a small-business financial solutions platform.
Broadcom Inc. AVGO, +0.53% disclosed a two-year deal with Apple Inc. AAPL, +1.16% to provide components, Monday evening. The stock rose 0.3% Tuesday.
Shares of Chico’s FAS Inc. CHS, +11.29% rose 12.5%, after the women’s apparel retailer reported disappointing same-store sales growth for the first quarter, but beat earnings and revenue that topped expectations.
Beyond Meat Inc. BYND, -21.75% stock fell 20.3% Tuesday, after J.P. Morgan analyst Ken Goldman cut his rating on the stock from overweight to neutral, citing valuation concerns. The stock has risen 265% since its May 3 initial public offering.
Shares of JetBlue Airways Corp. JBLU, +3.53% rallied 3%, after Citi analyst Kevin Crissey published a bullish note on the firm.
How are other markets trading?
Stocks in Asia were in rally mode Tuesday, with China’s Shanghai Composite Index surging 2.6%, Hong Kong’s Hang Seng Index adding 0.8% and Japan’s Nikkei 225 rising 0.3%. European markets were also rising on the hope of Chinese stimulus; the Stoxx Europe 600 has added 0.7%.
In commodities markets, crude oil CLN19, +0.51% was staging a rebound on Tuesday, while the price of gold GCN19, +0.20% was in retreat. The U.S. dollar DXY, -0.10% meanwhile, was virtually unchanged.