Friends
As we mentioned after yesterday’s market dip, we are on headline watch and that a simple tweet can move stocks in either direction. Well, this morning we got the “Chinese want to make a deal” tweet from the President and stocks quickly moved into positive territory. As further comments from the White House seemed to confirm that talks were back on for later this week, stocks moved comfortably into positive territory. But, the enthusiasm waned and stocks drifted lower into a disappointing close.
For the day, the Dow Jones Industrial Average was up 2 points to close at 25,967. The S&P 500 was down 4 points to finish the day at 2,879. Gold was down $4 to trade at $1,281 per ounce, while oil was up $.73 to trade at $62.13 per barrel WTI.
Positive trade headlines have become less and less effective as more and more doubt creeps into the actual validity of such headlines. On the other hand, negative headlines about the Chinese trade situation sends ripples of fear through the markets and stocks seem much more susceptible to such headlines. Before doubt was introduced into the trade proceedings this week, it appeared that the stock market was in a position to actually melt up given the comfortable environment for stocks (employment, inflation, GDP, earnings and tailwinds), but now it feels like the downside to a lack of a trade deal is considerably higher than the upside of achieving a trade deal. In other words, the risk/reward equation appears to have changed this week. Stay tuned.
Have a nice evening everyone.
