Renewed Trade Worries in Focus on Wall Street

By Investors Hub

The major U.S. index futures are pointing to a lower opening on Wednesday following the lackluster performance seen in the previous session.

Renewed uncertainty about a U.S.-China trade deal may weigh on the markets after a report from the Wall Street Journal said trade talks are in danger of hitting an impasse.

Citing former administration officials and others following the talks, the WSJ said the potential impasse threatens to derail the Trump administration?s plan for a limited phase one deal this year.

The Journal said both sides remain divided over core issues, including China?s demand for removing tariffs and the U.S.?s insistence on China buying farm products.

The report from the WSJ comes after President Donald Trump threatening higher tariffs on Chinese goods if an agreement is not reached.

?If we don?t make a deal with China, I?ll just raise the tariffs even higher,? Trump said during a cabinet meeting at the White House on Tuesday.

Trump said he was happy with the current trade situation, citing the billions of dollars brought in by tariffs, and declared, ?China is going to have to make a deal that I like.?

Despite the downward momentum being shown by the futures, traders have recently shown a knack for shrugging off negative news on the trade front amid unshakable optimism a deal will eventually get done.

Later in the trading day, the Federal Reserve is scheduled to release the minutes of its latest monetary policy meeting.

The minutes are likely to reinforce the view that the Fed will leave interest rates on hold for the foreseeable future after three straight rate cuts.

After moving modestly higher over the course of Monday?s session, stocks showed a lack of direction during trading on Tuesday. The major averages spent most of the day bouncing back and forth across the unchanged line.

The major averages eventually ended the session mixed. While the Nasdaq rose 20.72 points or 0.2 percent to a new record closing high of 8,570.66, the Dow fell 102.20 points or 0.4 percent to 27,934.02 and the S&P 500 edged down 1.85 points or 0.1 percent to 3,120.18.

Stocks initially moved to the upside amid recent upward momentum, which has helped propel stocks to record highs amid unshakable optimism about a potential U.S.-China trade deal.

Buying interest waned shortly after the start of trading, however, with disappointing results from Home Depot (HD) offsetting the positive sentiment.

Shares of Home Depot moved sharply lower after the home improvement retailer reported weaker than expected third quarter revenues and lowered its full-year sales forecast.

Department store chain Kohl’s (KSS) also posted a steep loss after reporting weaker than expected third quarter results and cutting its annual guidance.

Meanwhile, in a continuation of the market’ recent trend of shrugging off negative news on the trade front, traders seemed unfazed by Trump threatening higher tariffs on Chinese goods if an agreement is not reached.

In U.S. economic news, the Commerce Department released a report before the start of trading showing a substantial rebound in new residential construction in the month of October.

The Commerce Department said housing starts surged up by 3.8 percent to an annual rate of 1.314 million in October after plunging by 7.9 percent to a revised rate of 1.266 million in September.

Economists had expected housing starts to jump by 5.1 percent to a rate of 1.320 million from the 1.256 million originally reported for the previous month.

The report also said building permits spiked by 5.0 percent to an annual rate of 1.461 million in October after tumbling by 2.4 percent to a revised rate of 1.391 million in September.

Building permits, an indicator of future housing demand, had been expected to edge down by 0.1 percent to a rate of 1.385 million from the 1.387 million originally reported for the previous month.

Most of the major sectors ended the day showing only modest moves, although natural gas stocks showed another substantial move to the downside.

Extending the steep drop seen in the previous session, the NYSE Arca Natural Gas Index plunged by 2.9 percent to its lowest closing level in well over fourteen years.

The continued sell-off by natural gas stocks came as the price of natural gas for December delivery slid $0.056 or 2.2 percent to $2.510 per million BTUs.

A sharp decline by the price of crude oil also contributed to weakness throughout the energy sector. Reflecting the weakness in the sector, the NYSE Arca Oil Index and the NYSE Arca Oil Service Index slumped by 1.6 percent and 1.3 percent, respectively.

On the other hand, biotechnology stocks showed a strong move to the upside, driving the NYSE Arca Biotechnology Index up by 1.5 percent to a four-month closing high.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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