Day Traders Diary
Stocks held slim gains through most of Tuesday's session, but a late bout of selling left the major averages in negative territory. The Dow led the retreat, losing 0.7%, while the S&P 500 and the Nasdaq ended with losses of 0.3% and 0.2%, respectively. The small-cap Russell 2000 dropped 0.8%, ending its streak of record closes at four.
There was a bullish vibe on Wall Street ahead of Tuesday's opening bell after China's Ministry of Finance announced that it will be cutting import tariffs on U.S. automobiles (to 15% from 25%) and on some U.S. auto parts (to 6% from 8-25%), effective July 1. However, the news, which amplified a weekend promise from Beijing that it will buy more goods from the U.S., was later tainted by the realization that the White House has yet to reach a deal with Beijing to save Chinese telecom company ZTE -- which has been a bargaining chip in trade discussions.
President Trump said as much on Tuesday afternoon when he dismissed reports that the U.S. and China had agreed to a broad outline of a ZTE deal. Mr. Trump added that a potential deal could include a change in management at ZTE and a fine of up to $1.3 billion. In the same press conference, Mr. Trump touched on his upcoming summit with North Korean leader Kim Jong Un, saying that there is a "substantial chance" that the scheduled date of June 12 will not work out. Mr. Trump made that comment while meeting with South Korean president Moon Jae-in.
The market maintained its slim opening gain immediately following the president's press conference, but his comments, which didn't exactly serve to strengthen Monday's narrative that U.S.-China trade tensions are easing, likely helped fuel some selling in the late afternoon. The S&P 500 was up around 0.1%-0.2% through the morning, but started trending lower in the final hour and a half of trading. Thin trading conditions and technical factors also likely contributed to the late sell off.
Seven of eleven S&P 500 sectors finished Tuesday in the red, with industrials (-1.3%), energy (-1.3%), and materials (-0.9%) closing at the very bottom of the sector standings. The consumer discretionary sector also underperformed, losing 0.5%, as retailers sold off following the latest round of earnings, which actually came in better-than-expected. TJX (TJX 87.45, +2.75) jumped 3.3% after reporting its quarterly results, while Kohl's (KSS 60.61, -4.86), Advance Auto (AAP 115.33, -3.82), and AutoZone (AZO 602.00, -63.09) lost between 3.2% and 9.5%.
On a positive note, the heavily-weighted financial sector was the top-performing group on Tuesday with a gain of 0.6%. Reports that Wall Street could see some regulatory relief from the Volcker Rule (ban on proprietary trading) helped underpin the group. Also, the House of Representatives debated the Dodd-Frank reform bill on Tuesday, and a vote is expected to take place on Tuesday evening.
Investors did not receive any economic data on Tuesday.
All comments contained herein are for informational purposes only, and should not be considered as a solicitation to buy or sell any security. The firm does not guarantee the accuracy or completeness of the information or make any warranties regarding results from it's usage.