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Stock Market News For May 29, 2019

Zacks Equity Research
PACCAR's (PCAR) Q2 results to reflect positive impact of retail sales for Class 8 trucks and robust economy. However, higher commodity prices and tough competition are headwinds.

Markets closed in the red on Tuesday in absence of visible catalysts to boost equities. Meanwhile, market-watchers also closely followed the latest developments on the U.S.-China trade war front. President Trump stated at a press conference in Tokyo that America was not ready to make a trade deal with China. The three major benchmarks gave up earlier gains to end in the negative territory.

The Dow Jones Industrial Average (DJI) decreased 0.9%, to close at 25,347.77. The S&P 500 decreased 0.8% to close at 2,802.39. The tech-laden Nasdaq Composite Index closed at 7,607.35, losing 0.4%. The fear-gauge CBOE Volatility Index (VIX) increased 16.4% to close at 18.45. Decliners outnumbered advancers on the NYSE by a 1.46-to-1 ratio. On Nasdaq, a 1.35-to-1 ratio favored declining issues.

How Did the Benchmarks Perform?

The Dow nosedived 237.92 points to close in the red. Losses for the 30-stock index were broad based. Shares of 3M MMM and UnitedHealth UNH dropped 1.7% and 2.3%, respectively and weighed on the Dow. UnitedHealth carries 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 lost 23.7 points to end in negative territory. Of the 11 major sectors of the S&P 500, 10 ended in red, with consumer staples and utilities stocks leading the decliners. The Consumer Staples Select Sector SPDR Fund (XLP) and Utilities Select Sector SPDR Fund (XLU) decreased 1.6% each on Tuesday.

Meanwhile, the Nasdaq dipped 29.7 points to close in the red. Shares of Apple AAPL lost 0.4% and weighed on the Nasdaq.

U.S. “Not Ready” for a Trade Deal with China

Speaking from Tokyo at a joint press conference while on his state visit to the country, President Donald Trump stated that the United States was not ready to get into a trade agreement with China. Such news battered the markets.

Trump also stated that tariffs on Chinese products could soon be substantially increased and “very easily” at that. He also said the companies were leaving the shores of China to countries that have no tariffs, the likes of which included the United States as well as Asian superpowers like Japan. Despite such comments, Trump seemed optimistic about a trade deal with China “sometime in the future.”

Meanwhile, a report published in China’s state-run newspaper Xinhua stated that the United States was “scapegoating” China for its economic woes. Further, the news agency also called for a unified stance against “foreign pressure.”

Fiat Proposes a Merger with Renault

Fiat Chrysler Automobiles N.V. FCAU announced a proposed merger with Renault SA on May 27. Experts believe that the merger would create the third-largest automaker in the world in terms of production. Further, the new auto-maker would be valued $37 billion with a production capacity of approximately nine million passenger cars as well as trucks.

Economic Data

On the economic data front, the U.S. consumer confidence rose to a six-month high in May. The metric came in at 134.1 in the month, higher than the consensus estimate of 129.5 for the period.

Meanwhile, the S&P CoreLogic Case-Shiller 20-city index rose 0.7% in March, higher than 0.2% in the previous month.

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