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Red session on Wall Street amid lowering the likelihood for US-China trade deal

Dow Jones wiped out 300 points amid lowering likelihood for US-China trade deal.

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The main indexes on the New York Stock Exchange ended today’s trading session on red after it became clear that the meeting between US President Donald Trump and his Chinese counterpart, Xi Jinping, would unlikely happen before the expiry of the temporary trade truce in March.

The blue-chip index Dow Jones Industrial Average wiped out 289.49 points, or 1.14%, closing at 25,100.81 points. The broader S&P 500 reported a decline of 1.25% to 2,697.38 points, while the technology benchmark Nasdaq Composite fell by 108.61 points to 7,266.67 points.

Dow Jones

Earlier it became clear that the meeting between US President Donald Trump and his Chinese counterpart, Xi Jinping, would unlikely happen before the expiry of the temporary trade truce in March. This means that no agreement will be reached between Washington and Beijing by the beginning of March and the latest US tariffs on Chinese imports will automatically enter into force.

White House Economist Adviser Larry Kudlow said that “the US and China are unlikely to reach a trade deal before the end of the deadline”.

Meanwhile, the European Commission (EC) has considerably reduced its forecasts of economic growth in both the European Union and the Eurozone against a background of an expected slowdown in some of Europe’s largest economies. The European Commission predicts economic growth to continue but more moderate. In 2019, the Eurozone’s gross domestic product (GDP) growth will be 1.3%. This is a significant decrease from the autumn forecast of 1.9%.

In the bond markets, the yields on 10-year and 30-year US Treasuries declined to 2.655% and 2.999%, respectively.

In the currency markets, the US dollar index rose by 0.13% to 96.51 points. The Euro fell against the US dollar by 0.10% to 1.1348 USD.

Corporate stocks performance

The stocks of SunTrust Banks and BB&T Corp rose by 10% and 4% respectively, after the announced all-stock merger between the two banks, which is valued at 66 billion USD and will create sixth-largest US commercial bank. The deal would create a company with 442 billion USD in assets, as well as 324 billion USD in deposits with a customer base of around 10 million American households. The all-stock deal will see SunTrust investors receiving 1.295 shares of BB&T for each share they own, with BB&T owning 57% of the combined group to 43% for SunTrust.

The stocks of Twitter fell by 9.84% after the social network warned that expenses would rise notably this year as it moved to protect the integrity of its platform.

The stocks of Chipotle Mexican Grill rose 11.35% after the burrito chain posted adjusted fourth-quarter earnings that beat analysts’ estimates.

T-Mobile U.S. appreciated by 2% after posting better-than-expected fourth-quarter earnings and added more than 1 million new customers to its post-paid wireless network.

FAANG (Facebook, Amazon, Apple, Netflix, and Google) stocks were also on red, posting a decrease between 1.5% and 2.5%.

Corporate earnings reports

Twitter posted stronger-than-expected fourth-quarter earnings with revenue of 909 million USD and an increase in sales by 24% to 717 million USD. The earnings per share were 0.31 USD again beating analysts expectations. The monthly users in the micro-blogging platform were 321 million, which is down by 9 million year-on-year, but matching with forecasts. The company set revenue guidance for the first quarter of 2019 to 715-775 million USD. However, Twitter warned that expenses would rise notably this year as it moved to protect the integrity of its platform.

T-Mobile US Inc on Thursday reported quarterly revenue and profit that beat Wall Street estimates, as the wireless carrier added more customers than expected after expanding its network, particularly in US rural markets. T-Mobile said it added a net of about 1 million so-called postpaid phone subscribers in the fourth quarter compared with 891,000 additions a year earlier. Analysts were expecting 912,000 new subscribers. The company’s net income fell to 640 million USD, or 0.75 USD per share, in the fourth quarter, from 2.71 billion USD, or 3.11 USD per share, a year earlier, when it recorded a big one-time tax-related gain.