By Sue Chang and Chris Matthews, MarketWatch
Dow attempts to avert longest losing skid in 2 months
The U.S. stock market on Wednesday whipsawed between modest
gains and losses on worries over U.S.-China trade talks, a day
after mounting tensions between the two economic giants was blamed
for the Dow Jones Industrial Average's biggest daily decline in
about four months.
How are the benchmark indexes faring?
The Dow Jones Industrial Average rose 75 points, or 0.3%, to
26,040, the S&P 500 gained 7 points, or 0.3%, to 2,891, while
the Nasdaq Composite Index advanced 21 points, or 0.3%, to
7,985.
On Tuesday
(http://www.marketwatch.com/story/us-stock-futures-lower-as-trade-tensions-stay-in-the-spotlight-2019-05-07),
the Dow tumbled 1.8% to 25,965.09, suffering its largest percentage
decline since Jan 3, while the S&P 500 index dropped 1.7%, to
2,884.05. The Nasdaq fell 2%, to 7,963.76. The S&P 500 and
Nasdaq saw their biggest daily declines since March 22, according
to FactSet data.
Read:The stock market is on pace for its worst month since
December rout
(http://www.marketwatch.com/story/the-stock-market-is-on-pace-for-its-worst-month-since-december-routas-volatility-returns-with-a-vengeance-2019-05-07)
What's driving markets?
U.S. stocks are on track for their longest string of consecutive
daily losses since a five-session skid ended March 8, as Sino-U.S.
tariff tensions have buffeted assets perceived as risky, catching
many investors who had anticipated a tidy pact to the protracted
talks coming to fruition soon.
See:How U.S.-China trade uncertainty could trigger a
stock-market buy signal
(http://www.marketwatch.com/story/how-us-china-trade-uncertainty-could-trigger-a-stock-market-buy-signal-2019-05-08)
On Wednesday, a notice in the Federal Register formally laid the
groundwork to raise tariffs on $200 billion of Chinese imports to
25% from 10% early Friday, following through on remarks by U.S.
Trade Representative Robert Lighthizer regarding such a move on
Monday. The prospect of higher tariffs was first raised on Sunday
by President Donald Trump, rattling investors who had anticipated
better progress toward a near-term resolution between the two
superpowers.
Read:'China has chosen to retreat' -- the U.S. view as
negotiations reach critical juncture
(http://www.marketwatch.com/story/china-has-chosen-to-retreat-the-us-view-as-negotiations-reach-critical-juncture-2019-05-08)
Trump once again weighed in on the negotiations via Twitter
Wednesday, saying that the Chinese are now "coming to the U.S. to
make a deal," implying they had previously been slow-walking the
negotiations in the hope that Trump would be voted out of office in
2020.
(https://twitter.com/realDonaldTrump/status/1126106540015071232)
(https://twitter.com/realDonaldTrump/status/1126106541004873730)
Read:With Trump threatening to tighten the trade screws, here's
a look at what tariffs have done so far
(http://www.marketwatch.com/story/with-trump-threatening-to-tighten-the-trade-screws-heres-a-look-at-what-tariffs-have-done-so-far-2019-05-06)
Indeed, Beijing has said top trade envoys, including Vice
Premier Liu He, will head to Washington on Thursday to resume
negotiations.
China's diplomatic contingent attempted to revamp a nearly
150-page draft trade agreement last Friday, as they were reluctant
to agree to signing new trade terms into law, and raising the ire
of U.S. negotiators, according to Reuters
(https://www.reuters.com/article/us-usa-trade-china-backtracking-exclusiv/exclusive-china-backtracked-on-nearly-all-aspects-of-us-trade-deal-sources-idUSKCN1SE0WJ).
Adding to policy uncertainty, Iran said it may cease compliance
(http://www.marketwatch.com/story/iran-says-it-wont-comply-with-backs-out-of-some-2019-05-08)
with portions of a 2015 nuclear deal it signed with the U.S.,
Britain, France, Germany, China and Russia. Iranian President
Hassan Rouhani said that it would begin stockpiling heavy water and
low-enriched uranium unless non-U.S. signatories take steps to
shield the Iranian economy from Trump administration sanctions that
have been crippling its economy.
Also potentially weighing on markets are mixed signs from the
global economy, with new trade data out of China showing imports
rising, but exports unexpectedly falling 2.7%
(http://www.marketwatch.com/story/surprise-drop-in-chinas-exports-in-april-2019-05-07),
suggesting that global economic weakness continues to be a threat
with which U.S. investors must contend.
What are strategists saying?
"Some consolidation was to be expected, given the phenomenal
start of the year," for markets, said Eric Wiegand, senior
portfolio manager at U.S. Bank, adding that the recent U.S.-China
trade drama provides an opportunity for taking profits.
He also warned investors the trade dispute is "a phenomenon
where you can't get an edge, because you're just one tweet away
from having your previous posture undermined."
"Traders are in no mood to take a stand right now as the
uncertainties regarding China and Iran take center stage," wrote
Bespoke Investment Group's Paul Hickey in a note.
"The flight to safety has provided a big boost for Treasurys,
re-flattening the yield curve closer to the inversion zone," he
added. "And to think, just three trading days ago, the S&P 500
was flirting with a record high close!"
Which stocks are in focus?
Lyft Inc. shares slid 6.7% after the ride-hailing company late
Tuesday reported quarterly earnings for the first time since its
initial public offering in March. The company reported
first-quarter losses that were wider than expected, but revenue
that topped expectations.
Opinion: Lyft stops providing key data after IPO, then insults
investors' intelligence
(http://www.marketwatch.com/story/lyft-stops-providing-key-data-after-ipo-then-insults-investors-intelligence-2019-05-07)
Shares of Coty Inc. (COTY) tumbled 5% after the company reported
a narrower loss for the fiscal third quarter, ended March 31, than
the previous three months, but revenue that fell 10.4%, below
consensus expectations.
McKesson Corp. (MCK) stock rose 4.8% after the supply-chain
management company reported first-quarter earnings above
expectations.
Shares of Wendy's Co. (WEN) gained 4.1% after the fast-food
chain reported first-quarter profits and sales that surpassed Wall
Street forecasts.
Nautilus Inc. (NLS) stock fell 3.5% after the exercise equipment
maker reported a first-quarter loss of 29 cents a share, versus
analysts expectations of just 3 cents a share, according to
FactSet.
TripAdvisor Inc. (TRIP) shares sank 11% after the company posted
first-quarter earnings that beat analyst expectations, but revenue
that widely missed forecasts.
Qorvo Inc. (QRVO) shares rallied 5.8% after the radio-frequency
component maker announced first-quarter sales and profits that beat
Wall Street expectations.
Shares of Chesapeake Energy Corp. (CHK) rose 2.3%, reversing
premarket losses, after the oil and natural gas company reported a
wider first-quarter loss
(http://www.marketwatch.com/story/chesapeake-energys-stock-bounces-into-the-green-as-investors-digest-q1-results-2019-05-08)
and revenue that fell short of expectations. On the positive side,
the company beat forecasts for earnings before interest, taxes,
depreciation and amortization (Ebitda), as production and prices
were above projections.
How are other markets trading?
In Asia
(http://www.marketwatch.com/story/asian-markets-mixed-as-traders-weigh-us-china-trade-dispute-2019-05-06),
the Shanghai Composite Index fell 1.1%, while the Nikkei 225 , in
its second day from an extended holiday break, declined by a
sharper 1.5%, following a similar drop on Tuesday. European stocks
were mostly higher
(http://www.marketwatch.com/story/europe-markets-higher-as-investors-shake-off-trade-fears-2019-05-08).,
with the FTSE 100 index down 0.1%.
Gold was trading lower
(http://www.marketwatch.com/story/gold-at-one-week-high-as-stock-losses-look-to-persist-2019-05-08),
while the U.S. Dollar Index was mostly flat
(http://www.marketwatch.com/story/new-zealand-dollar-falls-after-central-bank-cuts-rate-us-dollar-slips-2019-05-08)
and crude oil rose
(http://www.marketwatch.com/story/us-crude-oil-climbs-up-from-roughly-one-month-low-as-iran-trade-deal-tensions-tug-at-market-2019-05-08).
--Mark DeCambre contributed to this report
(END) Dow Jones Newswires
May 08, 2019 13:02 ET (17:02 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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