Stock Market News for Jan 16, 2020 – January 16, 2020

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Wall Street closed higher on Wednesday following the signing of phase-one trade deal between the United States and China. The much-hyped Phase-One trade deal was the first tangible sign of de-escalation in nearly two-year long trade dispute between the two largest trading countries of the world. All three major stock indexes finished in the green.

The Dow Jones Industrial Average (DJI) gained 0.3% to close at 29,030.22. The S&P 500 rose 0.2% to close at 3,289.29. Meanwhile, the Nasdaq Composite Index closed at 9,258.70, advancing 0.1%. The fear-gauge CBOE Volatility Index (VIX) increased 0.2% to close at 12.42. A total of 7.3 billion shares were traded Wednesday, higher than the last 20-session average of 7 billion. Advancers outnumbered advancers on the NYSE 1.35-to-1 ratio. On Nasdaq, a 1.31-to-1 ratio favored advancing issues.   

How Did The Benchmarks Perform?

The Dow closed in positive territory with 17 components of the 30-stock index closing in the green while 13 ended in red. For the first time history, the blue-chip index closed above the technical barrier of 29,000. The Nasdaq Composite also ended in the positive territory due to strong performance by large-cap tech stocks. The S&P 500 finished in the green. The Utilities Select Sector SPDR (XLU) gained 1.4%.  Notably, eight out of 11 sectors of the benchmark index closed in the green while three finished in the red.

Phase-One Trade Deal

On Jan 15, U.S. President Donald Trump and Chinese vice premier Liu He signed an interim trade deal in the East Room of the White House White House.Per the deal, China has agreed to purchase $200 billion in U.S. goods over the next two years in addition to the total amount of China’s import from the United States. Notably, the Asian economic super power procured $186 billion of U.S. goods and services in 2017.

The interim trade deal also addressed intellectual-property disputes and force technology transfer along with strong enforcement provisions in financial services and currency issues in addition to tariff rollback and higher agricultural purchase. The U.S. government has decided to delete China from its list of currency manipulators.The Trump administration may rollback some the tariffs already imposed on China.

Although the final trade deal or the Phase-two deal is unlikely to happen before the U.S. presidential election scheduled November 2020, the interim deal will at least cool down tariff war, which significantly affected no only these two countries but also the Eurozone and several major emerging markets.

Following the partial trade deal, shares of trade-sensitive stocks like Visa Inc. (V Free Report) and Advanced Micro Devices, Inc. (AMD Free Report) plunged 1.9% and 0.7%, respectively. Both these stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Economic Data

The Department of Labor reported that the producer price index (PPI) or the wholesale inflation rose 0.1% in December, lower than the consensus estimate of 0.2%. Year over year, the PPI rose 1.3% in December. The core PPI (that strips out food and energy) grew 0.1%. Year over year, the core PPI advanced 1.5%.

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2020-01-16 08:34:00

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