Market Snapshot: Dow rises 200 points on upbeat earnings reports from Walmart, Cisco

U.S. stocks traded higher Thursday morning, with the Dow getting a lift after upbeat earnings from two components, while investors weighed the latest developments on the trade front after U.S. President Donald Trump appeared to target China telecommunications group Huawei Technologies Co. with an emergency declaration against threats to U.S. technology.

Meanwhile, economic data on the U.S. labor and housing markets came in better than expected, potentially offsetting worries over trade.

How are major indexes faring?

The Dow Jones Industrial Average DJIA, +0.89%  rose 219 points, or 0.9%, to 25,865, while the S&P 500 index SPX, +1.11%  rose 31 points, or 1.1%, to 2,882. The Nasdaq Composite Index COMP, +1.21%  rose 96 points, or 1.2%, to 7,918.

The S&P 500 and Nasdaq have bounced back over the past three sessions to erase the ground lost in a Monday rout triggered by an escalation of the U.S.-China tariff battle. Both indexes are now slightly positive on the week, while the Dow has trimmed its weekly decline to 0.2%.

Read: The woman who nailed the 2018 stock-market volatility blowup has kicked off an actively managed ETF

What drove the market?

Global equities have proven resilient after the Trump administration fired a fresh salvo in a trade spat with China late Wednesday, issuing an executive order that bans telecom equipment from countries considered “foreign adversaries”. The move appeared to target Huawei, which has been under pressure from the White House for months.

Additionally, the Commerce Department said Wednesday evening that it would add Huawei to a list of entities that engage in “activities contrary to U.S. national security and/or foreign policy interests,” a move that could greatly restrict its purchases of American-made chips, which it relies on for many of its products.

Other corners of the Trump administration were offering reasons for markets to hope that a U.S.-China trade deal of some sort was still in the offing. Treasury Secretary Steven Mnuchin said Wednesday that the U.S. would “most likely” meet with Chinese delegates again in Beijing after each side fired off trade tariffs at the other.

A spokesman for China’s Commerce Ministry said the country opposes other countries imposing unilateral sanctions on Chinese entities and that Washington should avoid further affecting Sino-U.S. relations, Reuters reported. The spokesman also said he had no information on plans for a U.S. trade delegation to visit China, the report said.

The tussle comes against the backdrop of trade tensions between the U.S. and China that had triggered volatility across global equity markets during the month of May, though the intensity of investor concern over trade has seemed to subside in recent days.

Meanwhile, investors appear less concerned that the U.S. will ratchet up trade tensions in the near term with other partners including the European Union and Japan, after reports that Trump would delay a decision on instituting new tariffs on car and auto part imports for up to six months.

Read: Can the stock market hold out long enough for Trump to win a trade war?

What economic data are in focus?

The number of Americans applying for jobless benefits fell by 16,000 in the week ended May 11, to 212,000, the Labor Department said Thursday. That’s below the 217,000 expected by economists polled by MarketWatch.

Construction of new homes rose 6% in April from the month earlier the Commerce Department said Thursday, to an annual rate of 1.24 million, above the 1.21 million pace expected by economists, per a MarketWatch poll.

The Philadelphia Fed’s manufacturing index rose to a four-month high in May, reaching 16.6, after registering 8.5 in April.

What are analysts saying?

“I’m rather surprised and impressed by the resiliency of the equity market and other risk assets in the face with all this uncertainty, which goes beyond trade,” Jim Solloway, chief investment strategist at SEI investments told MarketWatch, adding that rising military tensions in the Middle East are another risk that market participants seem to be looking past in recent days.

Read: Are stock-market investors complacent about Iran?

“People are beginning to place trade in more perspective,” he added. To be sure, nobody wins from a trade war, but when you look at the numbers, we’re still talking about a relatively small amount of tariffs in the context of a $21 trillion economy, so what we’ve seen to date isn’t as important as the general direction of global growth,” he said, adding that overall, data on the global economy has shown marginal improvements in recent weeks, which has helped to buoy investor confidence.

“It’s hard to keep up with the Trump White House at the moment. After the damaging trade war escalation that dominated either side of the weekend, the markets were granted a reprieve on Wednesday as reports came out suggesting the US was prepared to delay tariffs on cars from Europe and Japan,” wrote Connor Campbell, financial analyst at SpreadEx.

“And then the president zigged when it looked like he was zagging, declaring a national emergency to protect US computer networks from ‘foreign adversaries’ – i.e. a big middle finger to China via an attack on Huawei. The latter, alongside 70 of its affiliates, is now on the Entity List, meaning it will require official US government approval to buy crucial parts and components from American companies.”

Which stocks are in focus?

Dow Component Walmart Inc. WMT, +3.33% shares rose 4% Thursday, after the retailer reported better-than-expected earnings for the first quarter, though revenue fell short of analyst forecasts. U.S. same-store sales rose 3.4%, beating an expected 3.2% increase, according to FactSet.

Shares of fellow Dow constituent Cisco Systems Inc. CSCO, +6.05%  rose 5.6%, after the networking- and telecom-equipment company reported quarterly results late Wednesday that topped Wall Street forecasts and delivered an upbeat revenue forecast.

Dillard’s Inc. DDS, -9.69% stock fell 11.2% Thursday morning, following a Wednesday-evening earnings release that showed the department store chain missing revenue projections for the first-quarter, while same-store sales were flat.

Read: How Cisco is working around the China tariffs

How are other markets trading?

Asian markets had a mixed session, with a 1.2% drop for Korea’s Kospi SEU, -1.20%  and a 0.6% gain for the Shanghai Composite SHCOMP, +0.58% In Europe, stocks advanced, with the Stoxx Europe 600 SXXP, +1.08% rising 1%

Crude oil CLM9, +2.19% prices advanced, while gold GCM9, -0.79% was softer. The U.S. dollar DXY, +0.24% meanwhile, edged higher.

Providing critical information for the U.S. trading day. Subscribe to MarketWatch’s free Need to Know newsletter. Sign up here.

Filed in: Top News Tags: 

You might like:

An estimated 10.7 million Americans could miss work the Monday after the ‘Game of Thrones’ finale An estimated 10.7 million Americans could miss work the Monday after the ‘Game of Thrones’ finale
The Moneyist: My mom gave my sister $20,000 for her stem-cell treatment, I want her to deduct it from her inheritance The Moneyist: My mom gave my sister $20,000 for her stem-cell treatment, I want her to deduct it from her inheritance
The Wall Street Journal: OPEC considers two scenarios to adjust oil production The Wall Street Journal: OPEC considers two scenarios to adjust oil production
Biden pitches himself as a uniter even as he tears into Trump Biden pitches himself as a uniter even as he tears into Trump
A new theory on why sleeping less than 7 hours per night can lead to heart disease and Type 2 diabetes A new theory on why sleeping less than 7 hours per night can lead to heart disease and Type 2 diabetes
Economic Preview: There’s no recession in sight, but the U.S. economy appears stuck in second gear Economic Preview: There’s no recession in sight, but the U.S. economy appears stuck in second gear
NewsWatch: Crowd psychology says this ‘fool’s rally’ in stocks could fool bears NewsWatch: Crowd psychology says this ‘fool’s rally’ in stocks could fool bears
The Wall Street Journal: Students were advised to falsely claim to be racial minorities in college-admissions scandal The Wall Street Journal: Students were advised to falsely claim to be racial minorities in college-admissions scandal

Leave a Reply

Submit Comment
© 2019 Stock Investors News. All rights reserved. XHTML / CSS Valid.