Wall Street trading was volatile on Wednesday after the sell-offs earlier in the week following the continuing negotiations on the Sino-American trade deal. However, the news of the trade talks remains controversial before the deadline for introducing new US import tariffs.
The blue-chip index Dow Jones Industrial Average rose by 2.24 points to 25,967.33 points. The broader benchmark S&P 500 declined by 0.14% and the technology Nasdaq Composite fell by 0.26%. In the previous two days, Dow Jones reported a decline of nearly 540 points.
On Wednesday, President Trump wrote on Twitter that the Chinese delegation would travel to the United States to conclude a deal and put an end to ongoing trade tensions between the two countries that shook the markets for several months. The news reported by Trump was later confirmed by White House spokeswoman Sarah Sanders.
However, Donald Trump carried for nervousness after quoting the economist Peter Morici that with the Tariffs, the economy has grown more rapidly in the United States and much more slowly in China.
The investors fear that the United States and China will not be able to resolve their dispute before Friday when the US will raise tariffs on Chinese imports worth 200 billion USD. Beijing would take the necessary countermeasures if the US raises duties.
Donald Trump’s statement on raising duties negatively surprised investors, prompting sales on the global markets. On Tuesday, Dow Jones recorded its biggest downturn since early January, after traders realized that Trump’s threats were not just part of the trade talks.
However, some market participants believe that the impact of higher duties will be limited to some extent.
“The increase in customs duties will probably not lead to a complete collapse in the negotiations and as a result, the S&P 500 should be able to stay at 2,850 points or even more”, commented J.P. Morgan. According to the investment bank, much of the Chinese exports are still not subject to duties, and this will provide the basis for further negotiations.
Corporate stocks performance
Companies that are heavily dependent on a possible trade deal were trading differently on Wednesday.
Intel shares fell by 2.6%. Caterpillar reported a decline in its stock price of 1.29% while Apple gained 0.02%.
Lyft shares fell by more than 10% on Wednesday after the company reported a loss in the first quarter.
Disney, Walgreens Boots Alliance, and United Technologies rose more than 1% each to lead the Dow Jones index. Nike stock was a top gainer in the blue-chip index, up 1%, but it’s still sandwiched between its 50- and 200-day moving average lines with no new entry for now.
The stocks of Zoom Video Communications rebounded after Tuesday’s sell-off. The shares of the new issue soared 6%. It’s back above the 74.27 buy point after a breakout from an IPO base.
The top performers on the S&P 500 were McKesson Corporation (+4.79%), Chesapeake Energy Corporation (+3.96%) and Pioneer Natural Resources Co (+3.92%), while on the opposite side were TripAdvisor Inc (-11.41%), DaVita HealthCare Partners Inc (-8.55%) and Marathon Petroleum Corp (-7.07%).
Corporate earnings reports
So far 88% of the S&P 500 companies reported their first quarter financial results. Earnings grew by 6.7% on average, with 75% of public companies exceeding their forecasts.
Walt Disney handily beat earnings expectations even after stripping out big gains from an acquisition in a quarterly report Wednesday, but movie-studio revenue slipped ahead of a coming windfall. Disney reported earnings for the fiscal second quarter, which ended before the “Avengers: Endgame” began raking in big bucks, but did include returns from the prequel “Captain Marvel”. Disney reported earnings of 1.61 billion USD on revenue of 14.9 billion USD, both beating forecasts. Diluted earnings per share (EPS) from continuing operations for the quarter increased by 81% to 3.53 USD. Excluding certain items affecting comparability, EPS for the quarter decreased by 13% to 1.61 USD.
The first quarter profits of Thomson Reuters topped expectations and the company noted the strongest recurring revenue growth in years. The overall revenues grew by 8% to 1.49 billion USD, thanks to those higher recurring revenues and inclusion of Refinitiv revenues, and the company’s EPS (including discontinued operations) swung to a gain of 0.23 USD from a year-ago loss of 0.48 USD. Adjusted EPS rose by 29% to 0.36 USD. Thomson Reuters’ EBITDA dropped by 8%, to 397 million USD with margin dropping 440 basis points, to 26.7%.