- The Dow Jones fell from its record high as investors reacted to a Wall Street Journal report that US-China trade talks had stalled.
- It has been a banner day for Disney after the initial success of Disney , which had initially driven the stock market to a new record.
- China’s reluctance to purchase agricultural goods, alongside an escalating crisis in Hong Kong, is significantly worsening the outlook for the Dow.
TheDow Jones Industrial Averagezoomed to a record high on Wednesday. The index was lifted by a stunning midday rally from Disney, which recovered from an early loss after news broke that 10 million people had signed up for thenew Disney serviceon just the first day.
Fed Chair Jerome Powell was upbeat about the outlook for the economyand did little to move the Dow with an extremely measured testimony.
Unfortunately, the stock market was roiled late in the day by a report that crucial components of the phase one trade deal continue to pose a significant hurdle.
It wasa mixed day in the three major US stock market indices, with the Dow Jones leading the way over the Nasdaq and S&P 500.
At last check, the Dow had gained 80. 35 points or 0. 29% to trade at 27, 771. 84. The index had soared as high as 27, 806. 40 earlier in the session, but it plunged as much as 100 points in mid-afternoon trading.
The Nasdaq declined 0. 09%, while the S&P 500 clawed back from losses to edge 0. 05% higher.
A sizeable rally in commodity prices also ensued. Theprice of gold jumped almost 1%amid the sudden pressure on the Dow.
Trump’s trade war with China appears to have settled into an eerie period of uncertainty, and the stock market is clearly still nervy about the lack of progress.The Wall Street Journal’s report that China is reluctant to purchase US farm goods drove this home, given that Chinese agricultural purchases were at the root of the Trump administration’s rumored plan to remove tariffs.
Surprisingly,escalating violence in Hong Kongcontinues to have alimited impact on the Dow Jones, despite one of the world’s most important financial centers dipping into chaos and recession. In addition to the direct economic consequences, the crisis iscooling relations between the US and China, keeping the tail risk of tariff escalation on the table.
Inflation Data Remain Limited Threats to the Stock Market
For those investors worrying about the threat of rising inflation on the Dow Jones,Wednesday’s CPI datademonstrated that inflationary pressures are there, but remain steady.
Responding to the economic report, analyst Morten Lund at Nordea Markets said that he believes thatthe impact of the trade war continues to be negligible in affecting the vital US consumer, as price pressure remains subdued. He wrote,
The October numbers did not indicate that the recent increase in tariffs on Chinese goods had a material impact. Hence, core goods declined overall with “vulnerable” sub-components such as clothing and household furniture also declining. Thus, US consumers still appear to be fairly shielded from higher US tariffs on imported Chinese goods.
We partly attribute this to a strong USD and partly that tariffs have probably mainly hit intermediary goods. Hence, the spillovers from tariffs to consumer prices are a matter of substitution effects and price elasticity.
This viewpoint confirms what investors have been seeing in the earnings reports of several Dow giants like Nike and Apple, both of whichhave expertly navigated the trade warwith consistently strong sales.
Dow 30 Stocks: Disney Soars on Massive Subscriber Haul
It was a positive day for the Dow 30 on Wednesday, asa monster 6.7% rally in Disney (DIS) stockhelped to propel the index higher. Although Disney was struggling early in the trading session, the company reported thatit had signed up 10 million new subscribers on its first-day offering of Disney , its new streaming service.
Putting the excessive demand in perspective,Netflix’s total paid subscriber base is 151 million, which it has gradually acquired since its inception 22 years ago. Disney just added 6% of that in 24 hours . Unsurprisingly, Netflix’s stock was down 2.5% on the day, despiteinking a significant deal with Nickelodeon.
Apple stock was 0.8% higher afterannouncing a revamped MacBook Proahead of what investors clearly hope could be another stellar Thanksgiving period.
Nike stock rose more than 1.8%. The company announced thatit was no longer planning to deal directly with Amazon after pulling its products from the online retail giant.
This article was edited by Josiah Wilmoth.
Last modified: November 13, 2019 20: (UTC