Source : THE AGE NEWS
By Damian Troise and Alex Veiga
Stocks are wavering on Wall Street and holding on to most of the gains they made earlier in the week after the US and China declared a temporary cease-fire in their trade war.
The S&P 500 was mostly unchanged Wednesday afternoon. The Dow Jones fell 68 points, or 0.2 per cent in late trade. The Nasdaq rose 0.6 per cent. The Australian sharemarket is set to retreat, with futures at 5am AEST pointing to a fall of 35 points, or 0.4 per cent, at the open. The ASX added 0.1 per cent on Wednesday. The Australian dollar was 0.7 per cent lower at US64.71¢ at 5.13am AEST.
Wall Street is mixed on Wednesday. Credit: Reuters
The majority of stocks in the S&P 500 lost ground, but several big technology stocks helped counter the losses. Super Micro Computer surged 16.8 per cent after signing a partnership agreement with Saudi Arabian data centre company DataVolt. Advanced Micro Devices jumped 4.3 per cent after announcing a $US6 billion ($9.3 billion) stock buyback program.
Other big gainers included eToro Group, a retail trading platform for stocks and cryptocurrency. It rose 30.3 per cent in its first day of trading.
The market has been relatively steady since its surge on Monday, which came after the US and China entered a 90-day pause in their trade war. The market gained some more ground on Tuesday after the government reported that inflation unexpectedly cooled across the country in April. Additional updates on inflation and retail sales are expected on Thursday.
The benchmark S&P 500 index, which sits at the centre of many 401(k) retirement accounts has erased all its losses since President Donald Trump escalated his global trade war in early April. It has now erased its losses for the year and is back to within 4.1 per cent of its all-time high set in February.
“The stock market’s rally has legs, as the trade negotiation with China was seemingly the toughest one on the docket,” said Rick Gardner, chief investment officer at RGA Investments.
Trump has delayed a large swath of his most severe tariffs against America’s trading partners, but some import taxes remain in place. Uncertainty over the path ahead continues to hang over businesses and consumers. The on-again-off-again nature of Trump’s trade policy has left companies unable to plan ahead and consumers nervous about spending.
Businesses continue to trim or withdraw their financial forecasts as they face unpredictable trade policy and cautious consumers.
Boeing shares gained 0.5 per cent after the White House announced that Qatar Airways had inked a $US96 billion ($150 billion) plan to acquire as many as 210 Boeing Co. 787 Dreamliner and 777X aircraft. The White House cast the buy as the largest-ever widebody order and the largest-ever for the 787s.
American Eagle fell 5.7 per cent after the retailer withdrew its financial outlook for the year citing “macro uncertainty.” General Motors, UPS, Kraft Heinz and JetBlue are among the many companies representing a wide range of industries that have warned about the impact of tariffs and a weakening economy.
More than 90 per cent of companies in the S&P 500 have reported earnings for their latest quarter. The majority of companies have reported better-than-expected earnings, but forecasts for earnings growth during the current quarter have been broadly cut in half for companies in the index.
The economy has already showed signs of slowing. It shrank 0.3 per cent during the first quarter amid a surge of imports as businesses and consumers tried to stock up amid tariffs and policy uncertainty.
Inflation remains a big concern. The latest data on consumer prices released Tuesday showed that tariffs haven’t had much impact yet. But that could change as the impact of current tariffs make their way through supply chains and delayed tariffs potentially go into effect. Inflation has cooled to just above the Federal Reserve’s target of 2 per cent, but the threat of higher prices on goods because of import taxes has heightened worries about inflation heating up.
The US on Thursday will release its April report for inflation at the wholesale level, which is what companies are paying for goods. Economists expect an easing of inflation there.
The latest update Thursday for retail sales is expected to reflect a sharp drop to 0.2 per cent in April from 1.4 per cent the previous month.
Retail giant Walmart will also report its latest financial results on Thursday and its financial forecasts will be closely watched.
In the bond market, Treasury yields edged higher. The yield on the 10-year Treasury rose to 4.52 per cent from 4.47 per cent late Tuesday. The two-year Treasury yield, which moves more closely with expectations for Fed action, rose to 4.04 per cent from 4.00 per cent late Tuesday.
In stock markets abroad, indexes rose in Asia and were mixed in Europe.
AP
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