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4:01 p.m. ET: Dow drops 100+ points as China trade fears flare
Here’s where the markets settled at the end of Wednesday’s trading day:
S&P 500 (^GSPC): -0.38%, or 11.72 points
Dow (^DJI): -0.4%, or 112.93 points
Nasdaq (^IXIC): -0.51%, or 43.93 points
WTI crude oil prices (CL=F): +3.4% to $57.11 per barrel
10-year Treasury yield (^TNX): -5.1 bps to 1.735%
Gold (GC=F): -0.11% to $1,472.70 per ounce
3:13 p.m. ET: L Brands may face activist pressure: Report
An activist investor may be trying to oust L Brands CEO Leslie Wexner and break up the company over falling Victoria’s Secret sales and ‘Wexner’s connections’ with Jeffrey Epstein, FOX Business’s Charles Gasparino reported on Twitter.
While still down 6%, the stock spiked 2% following the news.
2:00 p.m. ET: FOMC minutes: Fed says rates are ‘well calibrated to support the outlook of moderate growth’
“With regard to monetary policy beyond this meeting, most participants judged that the stance of policy, after a 25 basis point reduction at this meeting, would be well calibrated to support the outlook of moderate growth, a strong labor market, and inflation near the Committee’s symmetric 2 percent objective and likely would remain so as long as incoming information about the economy did not result in a material reassessment of the economic outlook.”
12:56 p.m. ET: US-China may push ‘Phase One’ to 2020
Reuters reports a ‘Phase One’ trade deal may not happen this year, citing unnamed trade sources. Predictably, stock investors aren’t taking the news well as the Dow drops a new session low, falling 200 points.
12:41 p.m. GM goes after Fiat over allegedly corrupt labor negotiations
General Motors (GM) has filed a racketeering lawsuit against rival Fiat (FCAU) as part of an ongoing probe into corruption in the United Auto Workers. The automaking giant is accusing Fiat of trying to get a cost advantage in labor talks in 2009, 2011 and 2015.
According to The Wall Street Journal, GM will ask for “significant damages” from Fiat Chrysler after the discovery phase of the lawsuit is complete, the publication quoted chief legal counsel Craig Glidden as saying.
12:15 p.m. Stocks stay heavy on China-Hong Kong woes
U.S. stocks traded near the day’s lows, after legislation passed in the U.S. Senate that could possibly dampen prospects for a trade deal with China. The drop in risk-assets bolstered gold and government paper, helping the 10-year Treasury note yield to break below its 100-day moving average. Next up: Fed’s Beige Book at 2 p.m.
11:05: How Target is giving the competition a run for its money
After a blockbuster earnings report, Target (TGT) is proving that it is America’s new department store, writes The First Trade anchor Brian Sozzi. He also argues that Macy’s (M), Kohl’s (KSS), J.C. Penney (JCP) should be nervous.
The stock is having a monster day, up over 12% intraday to trade above $124.
11:00 a.m. UBS on 2020: Solid growth amid ‘stark political choices’
In UBS Global Wealth Management’s new outlook, the Swiss investment giant forecasts “stark political choices make the 2020 outlook more difficult to predict, but innovation driven by technology and sustainability will present new winners and losers over the decade ahead.”
On balance, the report reflects how a fractured political landscape is dominating investment considerations. Key takeaways include:
the global economy will grow 3% in 2020, down slightly from 3.1% in 2019;
Developed market growth will decelerate from 1.6% to 1.1%, while emerging market growth will accelerate from 4.2% to 4.6%.
Mark Haefele, the CIO of UBS’s wealth management arm, says elections, trade, monetary and fiscal policy will create “a ‘year of choices’ in 2020. However, investors should also look beyond the next 12 months to a ‘decade of transformation’ where new winners and losers could change how investors allocate capital.”
More can be found here.
10:27 a.m. Commodities ‘downbeat’ amid US-China talks
IHS-Markit’s Materials price index (MPI) fell 1.2% last week, its eighth consecutive weekly drop and reflective of broad weakness in energy and commodities. According to the research firm, the index’s weakness was driven by soft economic data out of China and mixed signals from US-China trade talks.
According to IHS:
The mood in commodity markets remains downbeat, even as equity prices increase and bond yields have begun to rise. While fundamentals have been slowly tightening in a number of industries, commodity markets remained focussed on China, where fresh data has been discouraging. Markets are also becoming jaded about hints of progress in US-China trade talks. The net effect is a more jaundiced view of the near future.
WTI crude oil prices rose in early trading (CL=F), up by nearly a percent to $55.68 per barrel
9:30 a.m. ET: Stocks weighed by Hong Kong, China
Markets start Wednesday’s session on the downside, as pro-Hong Kong legislation being weighed in the U.S. Senate stoked the ire of China, and dragged down Asia stocks.
Here’s where the major benchmarks opened the session:
S&P 500 (^GSPC): -5.48 points, or -0.18%
Dow (^DJI): -63.43 points, or -0.23%
Nasdaq (^IXIC): -23.50 points, or -0.25%
10-year Treasury yield (^TNX): -0.33 bps around 1.755%
WTI crude oil prices: (CL=F): +1.07% to $55.80 per barrel
Gold (GC=F): -0.27% at $1,470.30 per ounce
Separately, Target’s strong quarterly earnings are curbing the downside, and partly allaying fears about the retail sector generated by Tuesday’s retail bellwethers Home Depot (HD) and Kohl’s (KSS)— both of which missed quarterly earnings forecasts.
The turmoil in Hong Kong is being conflated with increasingly tough U.S.-China trade negotiations. As market veteran Peter Boockvar noted in his morning commentary:
This is what Hu Xijin, the editor of the Global Times, tweeted 4 hours ago: "Few Chinese believe that China and the US can reach a deal soon. Given current poor China policy of the US, people tend to believe the significance of a trade deal, if reached, will be limited. China wants a deal but is prepared for the worst-case scenario, a prolonged trade war." Many believe he speaks for the CCP.