Day Traders Diary
Stocks fought through trade war fears on Wednesday to advance for the second session in a row. The S&P 500, which opened Wednesday with a loss of around 1.5%, finished higher by 1.2% at 2644.69. The Nasdaq and the Dow also opened solidly lower, but ended with gains of 1.5% and 1.0%, respectively, advancing to 7042.11 and 24264.30.
Newly unveiled tariff plans between the world's two largest economies left investors feeling a bit uneasy on Wednesday morning; the Trump administration announced a plan to impose tariffs of 25% on Chinese imports across 1,300 product categories worth $50 billion in total, and China retaliated by announcing a similar plan, calling for duties of 25% on American imports across 106 product categories -- including soybeans, planes, cars, and chemicals -- also worth approximately $50 billion in total. However, the realization that the tariffs have yet to be put in force provided some comfort to investors.
The specific turnaround point for the market came mid-morning when NEC Director Larry Kudlow told reporters that there is a chance that the China tariffs do not go into effect, emphasizing that President Trump wants to solve the China trade issue with the least amount of pain possible. Stocks began trimming losses immediately after the opening bell, eventually triggering some short-covering activity that further accelerated the upward move. The major averages finished near their best marks of the day.
10 of 11 S&P sectors closed Wednesday's session in positive territory, with seven adding more than 1.0%. The consumer discretionary sector (+1.8%) was the best-performing group, with just about all of its components finishing in the green. Amazon (AMZN 1410.57, +18.52) rallied 1.3%, while homebuilders showed particular strength after Lennar (LEN 62.82, +5.73) reported better-than-expected earnings for its fiscal first quarter; LEN shares jumped 10.0%, and the iShares U.S. Home Construction ETF (ITB 40.52, +1.80) added 4.7%.
The top-weighted technology (+1.4%) and financials (+1.1%) sectors performed in-line with, or slightly better than, the broader market, but the industrial space (+0.4%) underperformed, as names with a large exposure to China, including Dow component Boeing (BA 327.44, -3.38), struggled; BA shares lost 1.0%. The utilities space (+0.2%) also lagged, and the energy sector was the only group to finish in negative territory, shedding 0.1%.
U.S. Treasuries finished Wednesday on a mostly lower note, pushing yields a tick higher; the benchmark 10-yr yield climbed one basis point to 2.79%. Elsewhere, West Texas Intermediate crude futures declined 0.2% to $63.37/bbl, gold futures advanced 0.3% to $1340.60/oz, and the U.S. Dollar Index ticked down 0.1% to 89.80.
Reviewing Wednesday's economic data, which included the ADP Employment Report for March, the ISM Services Index for March, and Factory Orders for February:
On Thursday, investors will receive the Trade Balance for February (Briefing.com consensus -$56.7 billion) and weekly Initial Claims (Briefing.com consensus 255K).
Headlines provided by briefing.com