US Stocks Drift Amid Uncertainty Over Trade, Economy

Strategic Insights -

The US stock market showed a lack of clear direction Thursday, with the S&P 500 index trading 0.3% higher in afternoon trading after earlier falling by a modest amount. The Dow Jones Industrial Average rose 175 points, or 0.4%, while the Nasdaq composite fell 0.2%. Treasury yields declined in the bond market, with the 10-year yield falling to 4.46% from 4.53% late Wednesday. Analysts said the uncertainty surrounding the trade situation and its impact on the economy is making it difficult to predict the future direction of the market.

Key Takeaways:

  • The S&P 500 index was 0.3% higher in afternoon trading after erasing an earlier loss that had it on track for a decline.
  • The Dow Jones Industrial Average rose 175 points, or 0.4%, as of 2:26 p.m. Eastern time.
  • Treasury yields sank in the bond market, with the 10-year yield falling to 4.46% from 4.53% late Wednesday.
  • Analysts said the trade situation and its impact on the economy is causing uncertainty and making it difficult to predict the future direction of the market.
  • Companies such as Walmart and Deere reported strong profits, but also cited uncertainty caused by the trade situation.
  • The Federal Reserve may have more room to cut interest rates later this year to bolster the US economy if it weakens under the weight of high tariffs.
  • The trade story isn't over, and it's still going to take time for tariffs to make themselves felt in economic data, according to Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
  • Walmart's stock fell 1.1% despite beating earnings expectations, as the company cited uncertainty and did not offer a forecast for profit in the current quarter.
  • Deere lowered the bottom end of its forecasted range of profit for the full year, but its stock rose 3.3% after reporting a stronger profit for the latest quarter than analysts expected.
  • Cisco Systems was another winner, jumping 4.6% after topping expectations for profit, with analysts optimistic about the company's artificial-intelligence prospects.
  • Dick's Sporting Goods tumbled 14.9% after announcing it would stop selling assault-style rifles, but also reported a better profit for the latest quarter than analysts expected.
  • Foot Locker soared 84.3% after coming into the day with a loss of nearly 41% for the year so far, becoming the second major footwear company to be acquired in as many weeks.
  • China moved to reverse some of its "non-tariff" measures against the US as agreed with Washington in their temporary trade war truce, while demanding that the US side "immediately correct its wrong practices."

Statistics:

  • The S&P 500 index was 0.3% higher in afternoon trading.
  • The Dow Jones Industrial Average rose 175 points, or 0.4%, as of 2:26 p.m. Eastern time.
  • The 10-year Treasury yield fell to 4.46% from 4.53% late Wednesday.
  • The two-year Treasury yield dropped to 3.97% from 4.05%, with traders building bets that the Fed will resume cutting its main interest rate as soon as September.
  • Walmart's stock fell 1.1% despite beating earnings expectations.
  • Deere's stock rose 3.3% after reporting a stronger profit for the latest quarter than analysts expected.
  • Cisco Systems jumped 4.6% after topping expectations for profit.
  • Dick's Sporting Goods tumbled 14.9% after announcing it would stop selling assault-style rifles.
  • Foot Locker soared 84.3% after coming into the day with a loss of nearly 41% for the year so far.

Sources:

  • AP News
  • Bloomberg
  • Reuters
  • The Wall Street Journal