Markets closed in the red on Tuesday, giving up earlier gains as China stated that it would retaliate firmly if President Trump imposes any further tariffs on Chinese goods. Meanwhile, China also announced that it would support the issuance of special-purpose bonds by the country’s local governments, in a bid to boost its economic growth. However, the three major benchmarks ended in the negative territory.
The Dow Jones Industrial Average (DJI) decreased almost 0.1%, to close at 26,048.51. The S&P 500 decreased 0.03% to close at 2,885.72. The tech-laden Nasdaq Composite Index closed at 7,822.57, losing 0.01%. The fear-gauge CBOE Volatility Index (VIX) increased 2.1% to close at 16.28. Decliners outnumbered advancers on the NYSE by a 1.01-to-1 ratio. On Nasdaq, a 1.35-to-1 ratio favored declining issues.
How Did the Benchmarks Perform?
The Dow declined 14.2 points to close in the red. Losses for the 30-stock index were broad based and was supported by a dip in the shares of Boeing BA and United Technologies UTX, which declined 1.3% and 4%, respectively. The Dow snapped its six-day streak of gains, giving up gains of around 186 points in the process.
While United Technologies carries a Zacks Rank #2 (Buy), Boeing has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 shed 1.01 points to end in negative territory. Of the 11 major sectors of the S&P 500, four ended in red, with industrials and utilities stocks leading the decliners. The Industrial Select Sector SPDR Fund (XLI) and Utilities Select Sector SPDR Fund (XLU) decreased 0.9% and 0.6%, respectively on Tuesday.
Meanwhile, the Nasdaq declined 0.6 points to close in the red. Shares of Microsoft MSFT dipped 0.4% and weighed on the Nasdaq.
China will Support Special-Purpose Bond Issuances
In a joint statement with China’s finance ministry and other economic planning agencies, the People’s Bank of China (PBOC) said that China would support the issuance of special-purpose bonds by the local governments.
These bonds are used primarily for infrastructural investment and would now also be used to finance major projects within the country. China aims to achieve a stable economic growth through this move.
China Vows to Retaliate
In response to President Donald Trump’s threat to impose additional tariffs on Chinese imports if China’s Xi Jinping skips this month’s G-20 Summit meeting, China promised a tough retaliation. The country stated that if the United States escalates the trade war between the two countries, it would be left with no choice but to take a firm stand against it.
Further, in a interview with the CNBC, U.S. Commerce Secretary Wilbur Ross stated that he believed that a trade deal would definitely be reached between the United States and China, albeit slowly. He stated that “even shooting wars end in negotiations.”
On the economic data front, The National Federation of Independent Business announced that its Small Business Optimism Index hit 105 in May. This represent a rise of 1.5 points from April’s reading and surpassed the consensus estimate of 102 in the month.
The price of wholesale goods increased 0.1% in May, in line with the consensus estimate for the period.
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