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Wall Street dips from record in 'Jason Bourne market'

Published 01/14/2020, 04:33 PM
Updated 01/14/2020, 04:33 PM
© Reuters. Traders work on the floor at the NYSE in New York

By Noel Randewich

(Reuters) - U.S. stocks dipped on Tuesday, reversing earlier intraday record highs, following a report that the United States would likely maintain tariffs on Chinese goods until after November's presidential election.

The eventual removal of tariffs by Washington would depend on Beijing's compliance with the Phase 1 trade accord, which is expected to be signed on Wednesday, Bloomberg reported, citing sources.

With the S&P 500 at record levels, equivalent to around 18 times expected earnings, algorithmic traders and human investors interpreted the Bloomberg report as a reason to sell, said Joe Saluzzi, co-manager of Themis Trading, in Chatham, New Jersey.

"We're in a Jason Bourne market. The first thing Jason Bourne does when he walks into a room is look for the exit, just in case," Saluzzi said, comparing investor sentiment to the fictional action character.

The Dow Jones Industrial Average, S&P 500 and Nasdaq each touched intraday record highs before losing ground in afternoon trade. The Dow ended the session with a modest gain.

Wall Street has surged in recent weeks, fueled by optimism that a truce in U.S. President Trump's trade war with China would boost corporate earnings.

China has pledged to buy nearly an additional $80 billion of manufactured goods from the United States over the next two years, and over $50 billion more in energy supplies, Reuters reported, citing a source briefed on the Phase 1 trade deal.

Kicking off the fourth-quarter earnings season, JPMorgan Chase & Co (N:JPM) rose 1.2% after reporting a better-than-expected profit on strength in its trading and underwriting businesses.

Wells Fargo & Co (N:WFC) tumbled 5.4% after reporting a slump in profit as it set aside $1.5 billion for legal expenses. Citigroup Inc (N:C) rose 1.6% as it topped Wall Street profit estimates.

"It (bank earnings) is reflective of where we are in the economic cycle," said Mike Loewengart, vice president of investment strategy at E*TRADE Financial Corp.

"We're coming off a decade of consistent gains and banks, especially JPMorgan producing record earnings, it's not surprising given the strength of the U.S. economy."

Analysts expect profits at S&P 500 companies to drop 0.5% for the second consecutive quarter, according to Refinitiv IBES data, largely due to a drag in energy and industrial earnings that have been hit by the prolonged Sino-U.S. trade war.

The Dow Jones Industrial Average (DJI) ended up 0.11% at 28,939.67 points, while the S&P 500 (SPX) lost 0.15% to 3,283.15.

The Nasdaq Composite (IXIC) dropped 0.24% to 9,251.33.

FedEx (N:FDX) rallied 1.8% after CNBC reported that Amazon (NASDAQ:AMZN) had lifted a ban on its sellers using the company for ground deliveries.

Delta Air Lines Inc (N:DAL) rose 3.3% after better-than-expected quarterly profit, boosted by customers gained from rival airlines' 737 MAX cancellations. The S&P 1500 airlines index <.SPCOMAIR> climbed 1.5%.

Pinterest (N:PINS) surged 9.6% after a report that the online scrapbook's U.S. user base had surpassed Snap Inc's (N:SNAP), making it the third-largest social media platform.

Advancing issues outnumbered declining ones on the NYSE by a 1.42-to-1 ratio; on Nasdaq, a 1.09-to-1 ratio favored advancers.

The S&P 500 posted 60 new 52-week highs and no new lows; the Nasdaq Composite recorded 160 new highs and 27 new lows.

© Reuters. Traders work on the floor at the NYSE in New York

Volume on U.S. exchanges was 7.3 billion shares, compared with an average of 7.0 billion shares over the last 20 trading days.

Latest comments

You know we're screwed when a big story of the day is Pinterest overtaking snap.
Trade deal phase one is a big lie and it will fail, markets will crash and USA and China will start a new cold war. Russia will be on Chinese side and Europe will be Neutral due to Trump’s lack of relations with old allies.
Trump derangement is strong in this one.
China wants to make incremental trade deals, then they get incremental tariff reductions. Poor reporting by Reuters.
such bs media trying to sandbag Trump. this exact scenario was covered by Reuters 8 weeks ago! it's leverage for phase 2. stop with the FUD
The fed is painting all of us in a corner.....its been great but i fear is time to pull the rip cord.... trees do not grow to the sky
seriously. who is buying this baloon?
Trump’s tariffs for another year killed the market today. The Phase 1 China deal isn’t worth the paper it’s written on....and Trumo’s known this all along. So has Larry Kudlow, who insiders tell me is no longer welcome on CBNC because they don’t trust him to speak the truth and because they’re embarrassed he ever worked there.
CNBC is as fake news as CLINTON NEWS NETWORK
Even at the height of trade negotiations tensions, we were near all time highs. This whole rally is driven by the Fed. Don't lie to yourselves and think trade matters to foaming at the mouth investors who want their fix from Powell. Look at chart of last 20 years. As soon as earnings dip, we're going to absolutely smash downwards and everyone will be baffled at how an electric car company could be worth more than the two largest US auto producers combined. Financial journalism is a hoax
Record high again. But, Nasdaq managed yearly highs 1 in 20 . What happened to the other 19. SP....1in 8 .what happened to the other 7?
So could you please present historical data comparing the “great” results?
I'm glad this isn't my only news source!
what the ******is going on right now qqq tanking
whatever
If you don't sell now you must have excellent credit. I can't because iam still losing and i want to be like you.
dude, when are you in? At the ATH? Everybody knows, it is very likely that optimism dies after phase 1 deal. There could be even a major correction around 10%-20% in two months, so I am only waiting to long gold and short funds.
in the normal condition - Yes. But we're living in the Fed's manipulation era. GL
Powell must be cheering his portfolio
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