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Stock Market News for Aug 27, 2019

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Benchmarks closed higher on Monday after President Trump said China wants to return to the table to negotiate trade issues. Shares of trade-sensitive stocks rose after Friday’s raft between two of world’s largest economies sent stocks in negative territory.

The Dow Jones Industrial Average (DJI) rose 1.1% or 269.93 points to close at 25,898.83. The S&P 500 gained 1.1% to close at 2,878.38. The Nasdaq Composite Index closed at 7,853.38, rising 1.3%. The fear-gauge CBOE Volatility Index (VIX) decreased 0.6% to close at 19.32. Advancing outnumbered decliners on the NYSE by a 2.33-to-1 ratio. On Nasdaq, a 2-to-1 ratio favored advancer issues.

Trade Negotiations to Resume

After a round of tariffs being slapped on Friday, a sign of relief came in as Trump said that U.S. will restart negotiations with China. He said he has received two “very good calls” from China and “‘let’s get back to the table.” Trump claims this to be a very positive development for the world.

The trade war had worsened on Friday as China unveiled plans to impose addition 5 to 10%  tariffs on $75 billion of U.S. goods, which was followed by Trump’s tweet ordering American companies to look for “alternative” sources and make goods at home, ceasing all trade with China soon.

In the press conference held after the conclusion of Group of Seven (G-7) summit in Biarritz, France Trump said he believes that China want to make a trade deal “very badly”. China’s vice premier and top trade negotiator, Liu He, had made the call, but they played down the importance of the call.

Investors cooled down in turn giving Wall Street’s trade-sensitive stocks a boost. Apple Inc’s AAPL shares gained 1.9% which lifted the major indexes. Apple stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Philadelphia Semiconductor index rose 1.1% as chipmakers depending on China for their majority revenue became hopeful. Shares of Intel Corporation INTC, QUALCOMM Incorporated QCOM, Advanced Micro Devices, Inc. AMD and NVIDIA Corporation NVDA were up between 1.2% and 3%.

Capital Goods Rises, Shipment Falls

The U.S. Commerce Department data released on Aug 26 showed that orders for long-lasting manufacturing goods rose 2.1% in July. The orders from non-defense capital goods excluding aircraft increased 0.4% driven by strong demand for electrical equipment, appliances and components. Whereas, orders for transportation equipment increased 7% compared to 4.1% in June and orders for non-defense aircraft and parts jumped 47.8%.

However, shipments slipped 0.7% in July, the biggest drop since October 2016. The shipments of core capital goods are falling as a result of the U.S.-China trade tension.

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