S&P 500 books first gain in 5 days as investors await China-U.S. trade progress

S&P 500 books first gain in 5 days as investors await China-U.S. trade progress

China pushed to end punitive trade tariffs ahead of G-20 meeting

The S&P 500 halted a four-day slump but the Dow marked its longest skid since March as investors awaited U.S.-China trade talks between President Donald Trump and China’s President Xi Jinping during the G-20 meeting in Japan that begins Friday.

How did benchmark fare?
The Dow Jones Industrial Average DJIA, -0.04% edged 10.24 points, or less than 0.1%, lower at to close at 26,526.58, marking a third straight decline, its longest slump since a five-session decline ended March 8, according to FactSet data. Meanwhile, the S&P 500 index SPX, +0.38% rose 11.14 points, or 0.4%, to finish at 2,924.92, and the Nasdaq Composite Index COMP, +0.73% finished 57.79 points, or 0.7%, higher at 7,967.76.

The Dow is on pace for its best June return, up 6.9%, since 1938, while the S&P 500 is on track for its best June since 1955, up 8.2%, according to Dow Jones Market Data.

What were the drivers?
A tariff cease-fire between Beijing and Washington would avert the next round of tariffs on additional $300 billion worth of Chinese imports.

The Wall Street Journal reported that Xi will present President Donald Trump terms to resolve a market-rattling trade confrontation ahead of the expected the Group of 20 gathering of developed countries set to take place this weekend.

Terms include the removal of a ban on the sale of U.S. technology to Chinese telecommunications giant Huawei Technologies Co., the removal of punitive import duties, and an end to a request for China to buy additional U.S. exports.

The demands raise some doubts that the two sides can achieve a detente and comes after a report from the South China Morning Post that a tentative U.S.-China truce had been achieved.

Comments from Larry Kudlow, National Economic Council director, added to the uncertainty around trade. Kudlow told Fox News that no preconditions were set ahead of Trump’s meeting with Xi. He also said the U.S. may move forward with additional tariffs.

“The more optimistic tone earlier was due to some positive headlines regarding this weekend’s meeting between President Trump and President Xi,” wrote Bespoke Investment Group’s Paul Hickey, in a Thursday note to clients. “But some of the air was let out of the balloon following a less optimistic tone from the WSJ.”

On the economic data front, the Commerce Department issued its final revision of first quarter GDP growth and said the U.S. economy grew at a solid rate of 3.1% in the first quarter, but consumer spending and business investments grew at a slower pace than in the earlier estimates.

The Labor Department said initial claims for unemployment benefits rose 10,000 to 227,000 in the seven days ended June 22, compared with the week prior. Economists polled by MarketWatch estimated new claims would total 216,000.

Which stocks were in focus?
Boeing Co. shares BA, -2.91% fell 2.9% after the Federal Aviation Administration said on Wednesday that it has found an issue with the 737 MAX that the manufacturer must address before it lifts the national grounding order.

Shares of Ford Motor Co. F, +2.93% gained 2.9% after officials announced 12,000 job cuts in Europe by the end of 2020 and stated that its European operations were on track to improve by the end of 2019.

Lyft Inc.’s stock LYFT, +3.65% rose 1.7%, after news that autonomous vehicle firm Waymo, which is a subsidiary of Google-parent Alphabet Inc. GOOG, -0.35% GOOGL, -0.34% has officially launched a program to make some self-driving minivans available for Lyft customers. The program is only available in a small area outside Phoenix.

Rite Aid Corp. RAD, +20.53% announced first-quarter financial results Wednesday evening, reporting a larger-than-expected loss and no revenue growth. However, shares of the retailer soared 21% Thursday. Rival Walgreens Boots Alliance Inc. WBA, +4.09% meanwhile, reported better-than-expected fiscal third-quarter earnings on Thursday morning sending to a 4.1% gain.

Shares of Conagra Brands, Inc. CAG, -12.10% tumbled 12.1%, after the processed and packaged-foods manufacturer reported worse-than-expected fourth-quarter earnings and sales Thursday morning.

How did other markets trade?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +0.20% fell less than a basis point to 2.007%. Goldman Sachs cut its year-end forecast to 1.75%, the same as JPMorgan Chase & Co. The 10-year yield has fallen from 2.4% at the beginning of the quarter.

In Asia, Japan’s Nikkei 225 NIK, -0.44% jumped 1.2% overnight, while China’s Shanghai Composite Index SHCOMP, -0.83% fell 0.7%. Hong Kong’s Hang Seng HSI, -0.63% index rose 1.4%. In Europe, the Stoxx Europe 600 ended flat.

In commodities markets, the price of crude oil CLQ19, -0.47% was little changed around $59.43 a barrel. Gold gold prices GCN19, +0.70% slipped for a second day after reaching a six-year high earlier this week. The U.S. dollar DXY, +0.04% was trading flat, as measured by the ICE U.S. Dollar Index at 96.21.

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