(Reuters) – The S&P 500 and the Dow Jones Industrial Average were set to open lower on Thursday after U.S. Commerce Secretary Wilbur Ross said the United States and China were “miles and miles” from resolving their trade dispute.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 22, 2019. REUTERS/Brendan McDermid
Ross told CNBC it was too early to judge where U.S.-china trade talks are headed, but added there is a fair chance the two countries will get to a trade deal. The world’s two largest economies are trying to meet a March 1 deadline to resolve their trade dispute.
“If you watch the political news coming out of Washington, that can mean all the difference in the world. So things can start out on a positive note and we get news about the shutdown, tariff battle with China, that can change the market 180 degrees,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.
Ross’s comments led the Dow and the S&P futures give up their slim gains. Nasdaq futures also shed some of their gains, but stayed afloat, helped by a rally in chipmakers and upbeat earnings reports from transportation companies.
Shares of semiconductor companies Xilinx Inc rose 9.1 percent and Lam Research Corp gained 6.2 percent in premarket trading after reporting better-than-expected quarterly results.
Texas Instruments Inc was up 1.6 percent after what analysts said were better-than-feared results, although the company warned of weak demand in China.
Investors were expecting weak reports from chip companies amid warnings of soft smartphone demand from Apple Inc and an economic slowdown in China, on which chipmakers rely for a large portion of their revenue.
Somber results from Korean chipmaker SK Hynix Inc fed into the gloom amid China’s economy slowing to its weakest in decades.
American Airlines Group rose 5.6 percent and Southwest Airlines Co shares gained 5.7 percent after the companies reported quarterly profits above expectations.
While American Airlines benefited from higher fares during the quarter, Southwest said the partial government shutdown had knocked off $10 million to $15 million from its revenue so far in January.
At 8:52 a.m. ET, Dow e-minis were down 61 points, or 0.25 percent. S&P 500 e-minis were down 3.75 points, or 0.14 percent and Nasdaq 100 e-minis were up 7.5 points, or 0.11 percent.
After a steady start to 2019, in which the S&P 500 hit over one-month high, stocks have lagged this week as fears of slowing growth hit risk appetite. The benchmark index is trading about 10 percent below the record high it hit in September.
Reporting by Shreyashi Sanyal and additional reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur
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