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THE GIST (“THE WHAT”)
With earnings season now at its tail-end, the S&P 500 index pulled back slightly from last week’s record close, ending a 3-day winning streak after cautious comments from President Trump dampened prospects of a ‘phase-one’ of the partial trade deal.
Opening lower, the index pared losses alongside a surge in Boeing Inc. that helped offset some of these trade concerns to close the session off of session lows at 3087.01, down 6.07 points and losing 0.20% over previous session’s close. Eight out of the eleven primary sectors traded lower, with Utilities and Energy leading the declines.
THE DETAILS (The “How & Why”):
Hopes of a potential ‘phase-one’ of the touted partial U.S. – China trade deal were dashed following cautionary comments from President Trump over the weekend. While acknowledging that the trade talks have been proceeding smoothly, he discredited the recent reports about an agreement to roll back tariffs as a part of a preliminary trade resolution.
Weaker-than-expected PPI data out of China that fell the most since July 2016 indicated shrinking manufacturing activity for the sixth straight month amid the year-long trade war. U.S. Treasury markets were closed for trading in observation of Veteran’s Day. Investors will be looking forward to a slew of key economic data including consumer price index, retail sales numbers and industrial production data that could provide insights into the health of the economy.
Meanwhile, oil prices slipped on trade uncertainty. Utilities, Energy and Health Care posted modest declines for the day. Qualcomm Inc. fell 2.33%, dragging other semiconductor stocks lower after Morgan Stanley downgraded the chip manufacturer, citing over valuation.
Qorvo Inc., Texas Instruments Inc. and Micron Technology Inc. fell more than 1.5% apiece. NVIDIA Corp, however, bucked the trend and closed slightly higher ahead of its earnings release following stock upgrades by UBS and Deutsche Bank.
Boeing Inc. jumped sharply mid-session, closing 4.55% higher amid expectations that its grounded flagship 737 Max fleet could return to service early next year. Walgreens Boots Alliance Inc. was another strong performer of the session, soaring 5.08% following reports of a record leveraged buyout offer by KKR & Co to take the company private.