Dipo Olowookere
by investors Hub
The major U.S. index futures are pointing to a higher opening on Thursday, with stocks likely to move to the upside after showing a lack of direction over the two previous sessions.
Stocks are likely to resume their recent advance 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.
Stocks showed a lack of direction over the course of the trading session on Wednesday, extending the lackluster performance seen on Tuesday. The major averages once again spent the day bouncing back and forth across the unchanged line.
Eventually, the major averages ended the session mixed. While the S&P 500 inched up 2.16 points or 0.1 percent to 3,076.78, the Dow edged down 0.07 points or less than a tenth of a percent to 27,492.56 and the Nasdaq dipped 24.05 points or 0.3 percent to 8,410.63.
The choppy trading on Wall Street came as traders seemed reluctant to make significant moves amid some uncertainty about the near-term outlook for the markets after the recent run to record highs.
Optimism about a potential U.S.-China trade deal contributed to the strength on Wall Street, but traders now seem to be looking for more concrete developments.
Stocks moved to the downside after a report from Reuters said a meeting between President Donald Trump and Chinese President Xi Jinping could be delayed until December, although selling pressure waned shortly afterward.
A senior Trump administration official told Reuters discussions continue over terms of phase one of the trade deal and a venue for a meeting between Trump and Xi.
Sites in Europe and Asia have been suggested for the meeting, with Sweden and Switzerland among the possibilities, while Trump’s suggestion of Iowa appears to have been ruled out, the official said.
The official said China’s latest push for more tariff rollbacks was not expected to derail progress toward an interim deal but noted that it was still possible an agreement would not be reached.
On the U.S. economic front, preliminary data released by the Labor Department showed labor productivity in the U.S. unexpectedly edged lower in the third quarter.
The report said labor productivity dipped by 0.3 percent in the third quarter after spiking by an upwardly revised 2.5 percent in the second quarter.
The drop came as a surprise to economists, who had expected productivity to climb by 0.9 percent compared to the 2.3 percent jump originally reported for the previous month.
Meanwhile, the Labor Department said unit labor costs soared by 3.6 percent in the third quarter after surging up by a downwardly revised 2.4 percent in the second quarter.
Economists had expected unit labor costs to jump by 2.2 percent compared to the 2.6 percent spike originally reported for the previous month.
Most of the major sectors ended the day showing only modest moves, although energy stocks saw substantial weakness amid a significant pullback by the price of crude oil.
Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index plunged by 3.1 percent, while the Philadelphia Oil Service Index and the NYSE Arca Oil Index tumbled by 2.9 percent and 2.7 percent, respectively.
Telecom stocks also saw considerable weakness on the day, dragging the NYSE Arca North American Telecom Index down by 1.8 percent. The index ended the session at its lowest closing level in ten months.
On the other hand, gold stocks showed a strong move to the upside, with the NYSE Arca Gold Bugs Index surging up by 1.6 percent. The strength among gold stocks came amid a rebound by the price of the precious metal.
