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Stocks mixed as Trump-Xi meeting looms

U.S. stocks struggled for direction on Thursday amid jitters over the outcome of a meeting between President Donald Trump and China’s Xi Jinping later this week.

The S&P 500 (^GSPC) rose 0.38%, or 11.14 points, as of market close. The Dow (^DJI) edged down 0.04%, or 10.24 points, as declines in shares of Boeing weighed on the 30-stock index. The Nasdaq (^IXIC) rose 0.73%, or 57.79 points.

Equities have traded choppily in the days leading up to Trump and Xi’s meeting at the G20 summit in Japan on Saturday. The tête-à-tête between the two world leaders comes after trade talks between the U.S. and China broke down and the Trump administration implemented additional tariffs on Chinese imports in May.

Given turbulent U.S.-China trade relations in recent weeks, many investors are skeptical the meeting will produce meaningful progress.

“While neither side will want to leave the meeting empty handed, we see several reasons why a major deal is not in the offing,” Aditya Bhave, Bank of America Merrill Lynch global economist, wrote in a note. “The Trump administration has already started to downplay hopes of a deal, likely because the two sides are still very far apart.”

“We think it will be difficult to bridge the gap because the strength of U.S. equity markets and the [Federal Reserve’s] dovish turn have greatly reduced the pressure on the U.S. to compromise,” Bhave added.

Xi is poised to lay out terms that the U.S. must meet before settling a trade deal, the Wall Street Journal reported Thursday, citing unnamed people familiar with the plan. Xi’s wish list will reportedly include a requisite that the U.S. lift rules banning American companies from selling parts to Chinese telecommunications company Huawei. China will also demand that the U.S. remove all punitive tariffs, and cease attempts to have China purchase more exports than had been agreed upon after the last G20 meeting in December, the WSJ reported.

Other reports have struck a positive tone ahead of the meeting, fueling optimism for at least a pause on further tariff escalation. The South China Morning Post reported Thursday that both the U.S. and China agreed to temporarily halt additional tariffs as trade talks resume. This decision will be publicized with separate press releases from each country ahead of the G20 meeting, according to the SCMP.

Meanwhile, China’s industrial sector held up in May even amid ongoing trade tensions. Industrial profits rose 1.1% in May over last year as higher sales and slower cost increases boosted companies’ bottom lines, helping reverse a 3.7% drop in April, the country’s National Bureau of Statistics reported Thursday. However, some economists have questioned the veracity of China’s government data.

ECONOMY

The U.S. economy grew at a 3.1% clip in the first quarter, according to the U.S. Bureau of Economic Analysis’ third print on gross domestic product (GDP). This was slower than the 3.2% pace expected, according to consensus economists polled by Bloomberg. The BEA previously reported annualized GDP of 3.1% in its second estimate.

Personal consumption rose a softer-than-expected 0.9% in the first quarter of 2019 over last year, the BEA reported in its third print on the metric. Consensus expectations had been for a 1.3% gain, or the same pace that had been reported in the second estimate. Meanwhile, core personal consumption expenditures (PCE) rose 1.2% over last quarter, versus a 1.0% reading expected and reported in the second print.

Stock futures pointed to a mixed open on Thursday. (Photo by Drew Angerer/Getty Images)

New unemployment claims rose to a near two-month high for the week ending June 22, according to the Department of Labor’s weekly release. Initial jobless claims totaled a seasonally adjusted 227,000 for the week, an increase of 10,000 from the prior week’s upwardly revised level and above the 220,000 anticipated by consensus economists. The four-week average for new jobless claims, which smooths some volatility in the weekly readings, rose to 221,250, or the highest level in more than one month.

Continuing jobless claims also rose for the week ended June 25. Continuing claims rose to a seasonally adjusted 1.688 million for the week, higher than the week prior’s upwardly revised level of 1.666 million. Consensus economists expected a reading of 1.665 million for the most recent week.

Pending home sales rose a better-than-expected 1.1% in May from April, according to the National Association of Realtors’ (NAR) Thursday report. This was stronger than the 1.0% gain expected by consensus economists, and represented a rebound from the 1.5% decline in contracts to purchase previously owned homes between March and April. NAR chief economist Lawrence Yun said in a statement that lower-than-average mortgage rates contributed to an increase in May’s pending home sales.

STOCKS

Walgreens Boots Alliance (WBA) reported quarterly results that topped consensus expectations as retail pharmacy sales surged over last year. Quarterly adjusted earnings per share of $1.47 beat expectations by 4 cents, while net sales of $34.59 billion were slightly ahead of estimates of $34.44 billion, according to Bloomberg data. U.S. retail pharmacy comparable sales rose 6% during the quarter, versus a 1.2% decline last year. Walgreens reaffirmed its forecast for sales to be flat through the end of its fiscal year, which extends through August.

Boeing (BA) shares fell in early trading after U.S. Federal Aviation Administration (FAA) officials said Wednesday that they identified a new concern that Boeing must address before its grounded 737 Max aircraft can return to the air. The FAA said it is “following a thorough process, not a prescribed timeline, for returning the Boeing 737 Max to passenger service.”

The point of concern affected FAA test pilots’ ability to quickly and easily follow required recovery procedures for runaway stabilizer trim, a source familiar with the FAA’s identification of the issue told Yahoo Finance. The issue relates to the way in which data is processed by the flight computer.

Ford (F) announced Thursday that it will need to cut 12,000 jobs in Europe by the end of 2020 in order to return to profitability amid ongoing challenges for automakers to reduce costs as they invest to comply with new clean-air rules. Ford has previously announced a restructuring plan, including closing six plants in Europe. Ford plans to pare the number of plants in the region to 18. The job cuts in Europe would be achieved primarily by voluntary separation programs, according to the company. Ford posted a loss of $398 million in 2018 in Europe.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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