Dow Slips, Stocks Mixed on U.S. Tariff Delay, European Central Bank Rate Cut

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Here Are 3 Hot Things to Know About Stocks Right Now

  • The Dow Jones Industrial Average was higher in early choppy trading Thursday after President Donald Trump said the U.S. agreed to a two-week delay in a planned increase in tariffs on some Chinese imports, and as the European Central Bank cut its main deposit rate and announced the resumption of quantitative easing.
  • CVS (CVSGet Report) shares climbed after analysts at Deutsche Bank called the company its “top pick” in the managed care, drug supply and beneficiary technology space. CVS is Real Money’s Stock of the Day.
  • Oracle ( ORCLGet Report) shares fell after the business software company posted weaker-than-expected first quarter sales and said CEO Mark Hurd would be taking a medical leave of absence.

Wall Street Overview

Stocks were higher Thursday but trading was choppy after President Donald Trump said the United States agreed to a two-week delay in a planned increase in tariffs on some Chinese imports as the European Central Bank cut its main deposit rate and announced a resumption of a bond-buying program.

The Dow, one day short of a seven-day winning streak, the longest in more than a year, was up 26 points, or 0.10%, to 27,163. The S&P 500 rose 0.20% and the Nasdaq gained 0.43%.

The president, in a tweet late Wednesday, said he would offer a two-week delay on the imposition of tariffs on China-made goods as a “gesture of good will” toward Beijing as the two sides prepared for high-level trade talks in October.

Trump followed up the news Thursday morning, tweeting,  “It is expected that China will be buying large amounts of our agricultural products!

It is expected that China will be buying large amounts of our agricultural products!

— Donald J. Trump (@realDonaldTrump) September 12, 2019

China said earlier this week it was exempting some U.S. goods from additional tariffs in a move that signaled potential thawing in the ongoing trade dispute between the world’s two biggest economies.

Treasury Secretary Steven Mnuchin told CNBC that he was “cautiously optimistic” about the U.S. trade negotiations with China.

Separately, the ECB increased the charge it applies to regional lenders holding cash in the central bank’s overnight deposit facility by 10 basis points to -0.5%, matching the lowest rate within the bank’s targeted lending operations. No changes were made to the bank’s main refinancing rate, which sits at 0%.

The ECB also said it would restart the dormant quantitative easing program on Novv. 1, with monthly purchases of government, agency and corporate bonds of around €20 billion, and run them “for as long as necessary”, and would only end when the Bank starts raising its key interest rates.

Trump tweeted his disapproval of the ECB for acting quickly and took a shot at the Federal Reserve, one of this favorite targets, saying “… And the Fed sits, and sits, and sits. They get paid to borrow money, while we are paying interest!”

CVS (CVSGet Report) shares climbed nearly 1% to $64.43 after analysts at Deutsche Bank called the company its “top pick” in the managed care, drug supply and beneficiary technology space, citing the potential for better-than-expected results from its pharmacy services business. CVS is Real Money’s Stock of the Day.

Oracle (ORCLGet Report) shares fell 5.4% to $53.28 after the business software company posted weaker-than-expected first quarter sales and said CEO Mark Hurd would be taking a medical leave of absence.

Walmart ( WMTGet Report) said it plans to expand its unlimited grocery delivery subscription service to 1,400 stores this fall. Shares were up slightly to $116.38.

Shares of AT&T (TGet Report) slipped nearly 2.2% to $37.88 as CFO John Stephens reiterated the company’s near-term earnings forecasts, while highlighting its plans to extract more value from TimeWarner, following Elliott Management’s criticism earlier this week.

Aurora Cannabis (ACBGet Report) shares fell 7.3% to $6.01 after the Canadian marijuana company posted weaker-than-expected fourth quarter revenues.In economic news, the Consumer Price Index for all items rose by 0.1% last month, with gasoline prices down about 3.5%, the Labor Department’s Bureau of Labor Statistics said.

“The U.S. economy continues to be in decent shape,” said David Madden, a market analyst at CMC Markets UK. “The jobless claims reading dipped to 204,000, from 217,000 and economists were expecting 215,000. When you factor in the very low unemployment rate, it is clear the jobs market is robust. Headline CPI cooled to 1.7%, but the core reading ticked up to 2.4% from 2.2%, and this highlights a clear increase in underlying demand, which begs the question, why would the Fed cut rates next week.”

In energy news, the U.S. EIA said in its Short-Term Energy Outlook that it expects oil demand to grow by only 0.9 million barrels per day (mb/d) this year. Brent crude contracts were down $1.49 to $59.32 a barrel, while West Texas Intermediate contracts, which are more tightly linked to U.S. gas prices, were $1.30 lower at $54.45 a barrel.

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