Dipo Olowookere
By Investors Hub
The major U.S. index futures are currently pointing to a roughly flat opening on Friday, as traders seem likely to retreat to the sidelines once again.
Stocks may resume the lackluster performance seen earlier in the week amid renewed uncertainty about a potential U.S.-China trade deal.
News U.S. and Chinese negotiators had agreed to roll back existing tariffs as part of a phase one trade deal contributed to early strength on Thursday.
However, buying interest waned after a report from Reuters said the idea faces fierce internal opposition from President Donald Trump?s advisers.
Multiple sources familiar with the talks told Reuters the idea of a tariff rollback was not part of the original October ?handshake? deal between Trump and Chinese Vice Premier Liu He.
Citing current and former administration officials, Reuters said there is a divide within the administration over whether rolling back tariffs will give away U.S. leverage in the negotiations.
The latest reports have sparked renewed uncertainty about what type of trade deal Trump will ultimately be willing to accept.
Trump has repeatedly criticized past administrations for being too weak on China, but he would also like a big political victory ahead of next year?s presidential election.
After sticking to the sidelines for two consecutive sessions, traders rushed back into the markets in early trading on Thursday amid signs of progress in U.S.-China trade talks. The major averages reached new record intraday highs but gave back some ground as the day progressed.
Nonetheless, the major averages managed to remain in positive territory, with the Dow and the Nasdaq ending the day at new record closing highs.
The Dow advanced 182.24 points or 0.7 percent to 27,674.80, the Nasdaq climbed 23.89 points or 0.3 percent to 8,434.52 and the S&P 500 rose 8.40 points or 0.3 percent to 3,085.18.
The early strength on Wall Street came after a spokesman for the Chinese Commerce Ministry said the U.S. and China have agreed to lift existing tariffs in phases.
“The trade war started with tariffs and should end with the cancellation of tariffs,” said ministry spokesman Gao Feng, who noted phase one of a trade deal must include both countries simultaneously canceling tariffs on each other’s goods.
The U.S. has widely been expected to scrap tariffs on about $156 billion worth of Chinese imports currently set to take effect on December 15th as part of phase one.
“Both sides have agreed to cancel additional tariffs in different phases, as both sides make progress in their negotiations,” Gao added without providing a timetable.
A report from Reuters said an anonymous U.S. official confirmed the planned rollback as part of a phase one trade agreement President Donald Trump and Chinese President Xi Jinping hope to sign before the end of the year.
However, the Reuters report also noted the prospect of lifting tariffs, even in phases, has drawn fierce opposition from many of Trump’s advisers, contributing to a notable pullback by stocks.
In U.S. economic news, the Labor Department released a report showing a bigger than expected decrease in first-time claims for U.S. unemployment benefits in the week ended November 2nd.
The report said initial jobless claims slid to 211,000, a decrease of 8,000 from the previous week’s revised level of 219,000.
Economists had expected jobless claims to dip to 215,000 from the 218,000 originally reported for the previous week.
Networking stocks pulled back off their best levels but still ended the day significantly higher, with the NYSE Arca Networking Index jumping by 2 percent.
Within the networking sector, CommScope (COMM) posted a standout gain after reporting better than expected third quarter earnings.
Considerable strength also remained visible among steel stocks, as reflected by the 1.7 percent gain posted by the NYSE Arca Steel Index. The index ended the session at a three-month closing high.
Telecom, oil, and chemical stocks also saw notable strength on the day, while gold stocks showed a substantial move to the downside amid a steep drop by the price of the precious metal.
Utilities, tobacco, and housing stocks also came under pressure over the course of the session, partly offsetting the strength seen in the aforementioned sectors.
