Market Snapshot: Stocks tread water as S&P 500 struggles for fourth straight record

Market Snapshot: Stocks tread water as S&P 500 struggles for fourth straight record

17 Dec    Finance News

Stock indexes traded on either side of unchanged Tuesday following yesterday’s session when all three major indexes scored records in the wake of Friday’s preliminary U.S.-China trade announcement.

What are major indexes doing?

The Dow Jones Industrial Average DJIA, +0.13% rose 20 points, or 0.1% to 28,258, while the S&P 500 index SPX, +0.15% gained less than a point to trade at 3,192 and the Nasdaq Composite Index COMP, +0.04% fell 3 points, or 0.1%, at 8,812.

The S&P 500 set a new intraday high early Tuesday.

On Monday, the Dow rallied 100.51 points, or 0.4%, to end at 28,235.89, and the S&P 500 advanced 22.65 points, or 0.7%, to finish at 3,191.45. The Nasdaq Composite finished at 8,814.23, a gain of 79.35 points, or 0.9%.

What’s driving the market?

Stocks struggled for altitude Tuesday after the S&P 500 and Nasdaq indexes logged their third straight record closes the day before, while the Dow saw its first record finish since Nov. 27 as equities rose in quiet trade following the announcement late last week of a partial, or “phase-one,” U.S.-China trade deal.

Read: Why Wall Street sees the stock market on the verge of a ‘melt-up’

Like the trade agreement in May, the deal announced to the public is light on specifics, while lawyers work on an 86-page text brandished by U.S. Trade Rep. Robert Lighthizer last week. The U.S. says China agreed to increase imports of goods in 2020 and 2021 by a total of $200 billion more than the total in 2017, including about $40 billion of U.S. farm goods. The deal also includes Chinese action to protect American intellectual property and vague assurances not to manipulate its currency.

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“US stocks could start feeling trade optimism fatigue as we near the holidays,” wrote Edward Moya, senior market analyst at Oanda, in a note.

“Expectations are now for the US and China to finalize the phase-one deal in the first week of January. As lawyers review the text, it seems this deadline could get pushed even further as not all the terms have been agreed upon,” he added. “President Trump wants talks to begin for the phase-two deal, but that does not seem on anyone’s radar.”

Some underlying support for stocks was also tied to last Thursday’s U.K. election, which saw the Conservative party led by Prime Minister Boris Johnson score a decisive victory, which soothed fears the country could leave the European Union without a trade deal in place. Those worries were revived Tuesday, however, after Johnson signaled he would rule out any extension of an end-of-2020 deadline for reaching agreement on an EU-U.K. trade deal.

See: Boris Johnson seeks to rule out Brexit delay beyond 2020

European equities were lower, with the U.K.’s FTSE 100 UKX, -0.21%  off 1%.

On the economic front, the U.S. Census Bureau said home builders increased new construction at an annual pace of 1.365 million in November, an increase of 3.2% from October’s pace and above the 1.356 million expected by economists polled by MarketWatch. Permits for new construction were issued at an annual rate of 1.482 million in November, a 1.4% increase for October’s rate, and above the 1.435 million expectation.

Data on U.S. November industrial production and capacity utilization showed a 1.1% increase in November, the largest monthly increase in two years, but below the 1.2% rise expected by economists. Utilization rose to 77.3%, in November, from 76.6% in October, slightly below the 77.5% consensus expectation. Data on job opening is due at 10 a.m. Eastern Time.

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What companies are in focus?

Shares of Dow component Boeing Co. BA, -1.20%  were off 0.7%, acting as a roughly 15-point drag on the Dow, after confirming late Monday it would suspend production of its 737 MAX jetliner. Boeing shares slumped more than 4% on Monday after The Wall Street Journal reported the company was considering such a move.

Shares of Eli Lilly & Co. LLY, +1.27%  rose 1.2% after the drugmaker provided an upbeat financial outlook for the year ahead.

Shares of Bed Bath & Beyond BBBY, +4.42%  might also be in focus after the company said six senior executives, including its chief merchandising officer and chief marketing officer, will depart ahead of the announcement of a new plan by Chief Executive Mark Tritton in early 2020. Shares were off 0.4% Tuesday.

Navistar International Corp. NAV, -7.42%  reported a decline in fiscal fourth-quarter net earnings and revenue that fell more than analysts expected, while providing a downbeat outlook for 2020 on Tuesday morning. Shares were down 5.7% Tuesday.

Shares of Micron Technology Inc. MU, +0.39%  rose 1.4% Tuesday after Wedbush Securities analyst Matt Bryson upgraded the stock to outperform from neutral, one day after a Susquehanna raised its rating on the stock.

Apple AAPL, +0.56%  shares traded flat after Rosenblatt Securities estimated total sales in China were down 30% in November on a year-over-year basis.

How are other markets trading?

The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -0.09%  fell 2.3 basis points to 1.866% Tuesday, after rising 7 basis points Monday.

Crude-oil prices were on the rise Tuesday, with West Texas Intermediate crude CLF20, +0.93%  for January delivery rising 35 cents, or 0.6% to $60.53 a barrel on the New York Mercantile Exchange. In precious metals, the price of an ounce of gold for February delivery GCG20, -0.02%  gained lost 20 cents to trade at $1480.20 an ounce on Comex.

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The value of the U.S. dollar edged higher relative to a basket its major trading partners, with the ICE U.S. Dollar index DXY, +0.15%  gaining 0.2%.

In Asia overnight, stocks closed higher, with the China CSI 300 000300, +1.36%  rising 1.4%, Hong Kong’s Hang Seng Index HSI, +1.22%  advancing 1.2% and Japan’s Nikkei 225 NIK, +0.47%  gaining 0.5%.

European stocks were pulling back, with the Stoxx Europe 600 SXXP, -0.70%  traded 0.7% lower, following its all-time high yesterday.

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