By Chris Matthews and Mark DeCambre, MarketWatch
Trump described progress toward a China and U.S. trade pact as
"a long way to go"
U.S. stocks closed lower on Tuesday after President Donald Trump
said an agreement with China on trade tariffs had "a long way to
go," in a briefing with reporters. The fade came a day after major
equity indexes eked out a round of all-time closing highs and as
Wall Street digested a fresh, bank-heavy round of earnings
reports.
How are the major benchmarks performing?
The Dow Jones Industrial Average fell 23.5 points to 27,335.6, a
loss of 0.1%, the S&P 500 index dropped 0.3% to 3,004.0,
shedding 10.3 points and the Nasdaq Composite index edged 0.4% low,
or a 35.4 point drop, to 8,222.8.
The Dow set a new intraday high of 27,398.68.9, rising 39.6
points Tuesday morning before paring those gains.
On Monday, the Dow gained 27.1 points, or 0.1% record of
27,359.2, the S&P 500 index added 0.6 point, or less than 0.1%,
to end at 3,014.3. The Nasdaq Composite Index rose 14.0 points to
reach 8,258.2, a 0.2% increase. All three major indexes scored
record closes.
What's driving the market?
President Donald Trump described progress toward a China and
U.S. tariff pact as "a long way to go" to reporters. Trump made his
comments during a cabinet meeting at the White House, with
reporters in attendance.
"The bullish move that some equity markets enjoyed thanks to the
slight improvement in U.S.-China trade talks, and the chatter about
the Federal Reserve lowering rates, has run out of steam, and some
traders are taking a breather," David Madden, market analyst at CMC
Markets UK, in a daily research note.
Read: China seen in no hurry to end trade war with U.S. after
comments by Commerce Minister
(http://www.marketwatch.com/story/china-seen-in-no-hurry-to-end-trade-war-with-us-after-comments-by-commerc-minister-2019-07-16)
The Fed has hinted strongly that it is likely to cut interest
rates as it attempts to dull the effect of trade conflicts and
expectations that the economy may weaken somewhat in the 11th year
of a history-setting economic expansion.
Federal Reserve chair Jerome Powell, while speaking in Paris at
the Bank of France, said the economic outlook hasn't improved since
the last Federal Open Markets Committee meeting in June
(http://www.marketwatch.com/story/fed-chief-powell-says-he-thinks-core-inflation-picked-up-a-bit-in-june-2019-07-16),
likely setting the stage for an interest rate cut.
Dallas Federal Reserve chief Robert Kaplan also said Tuesday
that inflation is likely to remain low because of the vast changes
new technologies have had on wages and prices.
(http://www.marketwatch.com/story/china-seen-in-no-hurry-to-end-trade-war-with-us-after-comments-by-commerc-minister-2019-07-16)Investors
were also digesting a series of earnings reports from major banks
JPMorgan Chase & Co. (JPM), Goldman Sachs (GS), and Wells Fargo
& Co.(WFC) painted a mixed picture of the banking industry, and
the broader economy's strength, following a report from Citigroup
Inc. (C)on Monday.
While all four banks were able to surpass much lowered
expectations for second-quarter performance, "the broad theme we're
seeing is slowing loan growth, somewhat muted trading revenues and
shrinking margins," said Stephen Biggar, director of financial
institution research at Argus Research in an interview. "Lower
manufacturing activity, lower housing activity and
business-investment slowing are all manifesting themselves" in bank
performance, he said.
JPMorgan's performance in particular, however, does reflect the
continued strength of the U.S. consumer, given that provisions for
losses on consumer loans relative to income remained steady.
Also reflecting a healthy U.S. consumer were data on June retail
sales,
(http://www.marketwatch.com/story/retail-sales-pop-again-in-june-in-good-sign-for-consumer-driven-us-economy-2019-07-16)
which rose 0.4% compared to May, above the 0.1% gain expected by
economists polled by MarketWatch.
"The banks generally are a really good sign of the economy,"
said Diane Jaffee, a senior portfolio manager at TCW, in an
interview, adding that both Citi and JPMorgan reported positive
earnings growth from their bank-branded consumer credit card units
for the second quarter.
"The consumer has been quite strong," Jaffe said.
That's in contrast to the U.S. factory sector, which showed
unchanged growth in the three months ended in June, the second
straight quarterly decline and below the 0.1% gain expected by
economists, per a MarketWatch poll, the Federal Reserve said
Tuesday
(http://www.marketwatch.com/story/us-industrial-production-slumps-in-second-quarter-2019-07-16).
Which stocks are in focus?
Dow-component JPMorgan's stock rose 1.8% Tuesday, after the bank
reported earnings and revenue
(http://www.marketwatch.com/story/jpmorgan-tops-profit-and-revenue-estimates-2019-07-16)
for the second quarter that beat analyst estimates.
Shares of Goldman Sachs, also in the Dow, rose 1.9% after the
bank reported second-quarter earnings and revenue that beat Wall
Street expectations
(http://www.marketwatch.com/story/goldman-sachs-stock-surges-after-big-profit-and-revenue-beats-raised-dividend-2019-07-16),
while raising its dividend by 47%.
Shares of Wells Fargo fell 3.0%, even after the bank reported
second-quarter earnings
(http://www.marketwatch.com/story/wells-fargo-earnings-blow-past-estimates-2019-07-16)
and revenue that surpassed analyst forecasts.
Dow-component Johnson & Johnson(JNJ) was in focus after the
health-care retailer produced quarterly results
(http://www.marketwatch.com/story/shares-of-jj-up-08-after-earnings-and-revenue-beat-2019-07-16)
that were better than expected while boosting its full-year
outlook, though it reported falling revenue compared with the
second-quarter of last year. Shares of J&J were down 1.6%.
Domino's Pizza, Inc. (DPZ) stock fell 8.7% Tuesday, after the
fast-food retailer reported second-quarter revenue
(http://www.marketwatch.com/story/dominos-shares-sink-after-revenue-miss-2019-07-16-7914128)
and same-store sales growth that fell short of analyst
estimates.
Facebook Inc.(FB) were in focus after executives from the
social-media giant were treated to a blistering reception
(http://www.marketwatch.com/story/facebooks-libra-cryptocurrency-project-gets-blistering-reception-from-senate-2019-07-16)
while explain its digital currency venture Libra coin to a Senate
banking committee on Tuesday. Facebook's stock was unchanged.
Blue Apron Holdings Inc. (APRN) rose 35.6% after the meal-kit
company announced seasonal recipes
(http://www.marketwatch.com/story/blue-apron-shares-jump-after-beyond-meat-recipes-announced-2019-07-16)
that will include plant-based proteins from Beyond Meat Inc.
(BYND).
How are other markets trading?
The yield on the 10-year Treasury note touched a four-week high
of to 2.12%, after strong consumer data potentially trimmed the
prospects for aggressive rate cuts this year
(http://www.marketwatch.com/story/treasury-yields-edge-higher-ahead-of-retail-sales-2019-07-16).
In Asia, stocks ended mixed, with the China CSI 300 falling
0.5%, Japan's Nikkei 225 declining 0.7% and Hong Kong's Hang Seng
Index advancing 0.2%. European shares were on the rise, with the
Stoxx Europe 600 0.35% higher.
In commodities markets, crude-oil fell 2.5%, while gold prices
fell 0.6%.
The U.S. dollar rose 0.5%, as measured by the ICE U.S. Dollar
Index.
Additional reporting by Joy Wiltermuth
(END) Dow Jones Newswires
July 16, 2019 16:28 ET (20:28 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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