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Postponement of car duties boosted Wall Street stocks

Wall Street stocks

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The main indexes on the New York Stock Exchange ended today’s trading session into the green, backed by new hopes about the news about the planned postponement of US tariffs on car imports.

The blue-chip index Dow Jones Industrial Average added 142.57 points, or 0.56%, to 25,674.62 points. The broader S&P 500 has advanced 0.68% to 2,853.65 points, while the technology Nasdaq Composite rose by 93.96 points, or 1.21%, to 7,828.46 points.

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The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 8.97% to 16.44.

The rising trade fears sent equities reeling this month. The Dow and S&P 500 are down 4.6% and 4.2%, respectively, while the Nasdaq has fallen 4.9%.

Earlier today, CNBC announced that Donald Trump’s administration plans to postpone the imposition of duties on car imports for up to six months, and is currently hindered by the escalation of the trade dispute with China.

The White House has to decide by Saturday whether to put the car parts on the sidelines because of national security concerns. After Saturday, the administration will have 180 more days to make a decision while negotiating with the authorities of the affected countries.

Positive news in the focus of investors was the statement by US Finance Minister Steven Mnuchin, who said the talks with China were expected to continue with a visit to the US delegation in Beijing.

On the other hand, the markets also reacted to the negative data of the US economy. Bloomberg reported that production in US factories declined in April for the third time in the last four months mainly due to the production of machinery and motor vehicles. The industrial production in the US declined by 0.5% compared to March, contrasted with the consensus forecast to keep growth from the previous month.

At the same time, the US retail sales unexpectedly shrunk in April for the second time in three months under the pressure of weaker sales of cars and building materials. The retail sales fell by 0.2% in April, following an increase of 1.7% in the previous month, which was also the highest monthly growth since 2017.

On bond markets, the yields on 10-year and 30-year US Treasuries fell to 2.371% and 2.819%, respectively.

Corporate stocks performance

Inside the Dow Jones, three stocks rose for every two that fell. Caterpillar was off 0.4% after being down about 2%. Visa advanced 1.3%.

Caterpillar has dropped 26% since January 23, 2018, when President Donald Trump launched the trade war with tariffs on washing machines and solar panels. More recently, Trump tweeted May 5 that he was ready to slap more tariffs on China. Tariff talks with China failed, and Trump stepped up the penalties.

Fiat Chrysler shares traded on the New York Stock Exchange rose by 1.7%, while those of Ford Motor and General Motors added 1% and 1.3%, respectively.

The stocks of Microsoft Corporation added 1.41%, while Pfizer Inc was up by 1.21%.

However, the surprisingly low retail sales pushed the shares of Walmart Inc into the red, wiping out 0.41%.

Shares of the biotechnology company ImmunoGen fell 32% in premarket trade Wednesday after the company said the US Food and Drug Administration recommended conducting a new Phase 3 trial of its ovarian cancer drug, mirvetuximab soravtansine.

The top performers on the S&P 500 were Coty Inc (+9.65%), Progressive Corp (+5.24%) and Alphabet Inc (+4.08%), while on the flipside were Agilent Technologies Inc (-11.01%), The Charles Schwab Corporation (-3.61%) and Transdigm Group Incorporated (-3.17%).

Corporate earnings reports

Cisco Systems came out with quarterly earnings of 0.78 USD per share, beating the analysts’ estimate of 0.77 USD per share. This compares to earnings of 0.66 USD per share a year ago. These figures are adjusted for non-recurring items. For the next quarter, Cisco expects adjusted earnings of 0.80-0.82 USD per share on 4.5% to 6.5% year-over-year revenue growth, or 13.21-13.46 billion USD. Cisco said the forecast excludes the company’s now-divested Service Provider Video Software Solutions business, which brought in 206 million USD in the fourth quarter in 2018. Analysts had estimated earnings of 81 cents a share on revenue of 13.29 billion USD.

Macy’s Inc posted stronger-than-expected first quarter earnings Wednesday, and reaffirmed its full-year guidance, as the struggling retailer notched a surprise uptick in same-store sales growth and saw solid gains from its push to online revenues. Macy’s said earnings for the three months ending in March came in at 0.44 USD per share, down 8.3% from the same period last year but 11 cents ahead of the Street consensus forecast. Group revenues, Macy’s said, slipped to 5.504 billion USD and were just shy of analysts’ estimates, but same-store sales rose 0.7% thanks in part to the group’s Growth50 turnaround strategy.