MARKET SNAPSHOT: Stocks Drift Lower As Investors Digest Inflation Data, Eye U.S.-China Trade

Date : 13/06/2019 @ 01:42
Source : Dow Jones News
Stock : FTSE 100 Index (UKX)
Quote : 7150.57  -31.75 (-0.44%) @ 02:35
FTSE 100 share price Chart

MARKET SNAPSHOT: Stocks Drift Lower As Investors Digest Inflation Data, Eye U.S.-China Trade

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By Chris Matthews and William Watts, MarketWatch

Tesla shares rise after Musk denies demand problem

Stocks fell modestly Wednesday, a day after the Dow Jones Industrial Average snapped a six-day winning streak, as investors digested a reading on May consumer inflation and continued to eye the U.S.-China trade fight.

How are the benchmarks performing?

The Dow Jones Industrial Average fell 40 points, or 0.2%, to 26,007, while the S&P 500 index lost 6 points, or 0.2%, to 2,880. The Nasdaq Composite index fell 33 points, or 0.4%, at 7,790.

Stocks ended with small losses Tuesday after flipping between positive and negative territory. The Dow closed 14.17 points lower at 26,048.51, off 0.1%, while the S&P 500 shed 1.01 points, or less than 0.1%, to close at 2,885.72. The Nasdaq finished with a loss of 0.6 points at 7,822.57. The declines ended five-day winning streaks for both the S&P and the Nasdaq.

What's driving the market?

U.S. price inflation remains tame, according to the Labor Department's Consumer Price index (http://www.marketwatch.com/story/consumer-inflation-rises-01-in-may-smallest-bump-in-4-months-cpi-shows-2019-06-12), which showed prices rising 0.1% in April, in line with the consensus forecast, according to a MarketWatch poll of economists.

The increase in the cost of living over the past 12 months also slowed to 1.8% from 2%. When eliminating volatile food and energy prices, inflation fell from 2.1% annually to 2%.

Though the measure isn't as closely followed by the Federal Reserve as the personal consumption expenditures index, this latest evidence that price growth is slowing could support investors belief that the Federal Reserve will cut interest rates sooner than later.

But U.S. President Donald Trump on Tuesday said he was the one "holding up" a trade deal with China, (http://www.marketwatch.com/story/trump-i-have-no-interest-in-trade-deal-until-china-reverses-its-stance-2019-06-11) saying the two countries would "either do a great deal...or we're not doing a deal at all."

Analysts blamed the remarks for casting a somewhat negative tone over global equities.

Investors are also watching protests in Hong Kong. Police on Wednesday fired tear gas and high-pressure water hoses (http://www.marketwatch.com/story/renewed-protests-in-hong-kong-as-government-debates-extradition-bill-2019-06-11) at protesters who massed outside government headquarters in opposition to a proposed extradition bill that has sparked concerns over China's control of the semi-autonomous territory.

What companies are in focus?

Shares of electric car maker Tesla Inc. (TSLA) rose 1.8%, after Chief Executive Elon Musk late Tuesday took the stage at the company's shareholder meeting and denied the company was facing demand and production problems (http://www.marketwatch.com/story/elon-musk-tesla-does-not-have-a-demand-problem-2019-06-11).

In deal news, France's Dassault Systems SE said it reached an agreement to acquire U.S. technology group Medidata Solutions Inc.(MDSO) in an agreement valued at $5.8 billion. Dassault will offer $92.25 a share for Medidata in an all-cash deal. Medidata shares fell 3.6% Wednesday at $90.75 a share.

Shares of Mattel Inc. (MAT) rose 8.8% Wednesday, after reports (http://www.marketwatch.com/story/mattel-shares-jump-5-on-reports-of-rejected-merger-offer-2019-06-12) the toy company turned down a merger offer from MGA Entertainment Inc. It also announced it has extended its licensing agreement with Warner Bros.

Shares of Dave & Buster's Entertainment Inc. (PLAY) tumbled 21.3% (http://www.marketwatch.com/story/dave-busters-stock-tanks-after-companys-quarterly-miss-lowered-guidance-2019-06-11) Monday, after the operator of entertainment and dining venues reported Tuesday evening first-quarter sales and earnings that fell short of Wall Street expectations.

Neptune Wellness Solutions Inc. (NEPT.T) announced a 3-year sourcing agreement (http://www.marketwatch.com/story/neptune-wellness-stock-soars-again-after-another-3-year-extraction-deal-with-a-cannabis-company-2019-06-12) with cannabis company Green Organic Dutchman Holdings Ltd. Neptune shares rose 3.7% Wednesday.

Salesforce.com Inc. (CRM) said Wednesday (http://www.marketwatch.com/story/salesforce-corrects-earnings-expectations-around-tableau-deal-2019-06-12) that a recently announced acquisition of Tableau Software Inc. (DATA) would reduce 2020 earnings less than initially assumed. The stock rose 0.9% Wednesday morning.

Shares of Cisco Systems Inc. (CSCO) fell 1.5% Wednesday, after William Blair analyst Jason Ader cut his rating (http://www.marketwatch.com/story/cisco-stock-falls-after-william-blair-downgrade-2019-06-12) on the stock to market perform from outperform.

What are analysts saying?

"This morning's inflation data adds more fuel to the rate cut fire and increasingly supports the Fed's dovish stance,' wrote Mike Loewengart, vice president of investment strategy at E-Trade, in an email.

"We could likely see the markets react well to this news," he added. "While we are experiencing pockets of weakness on the jobs front, the big takeaway for investors today is that economic fundamentals are still quite strong and there continues to be reasons to be optimistic about the state of our economy--sure growth is slowing, but that does not mean its shrinking."

"President Trump has defended his use of levies, and the threat of higher levies, as a way of trying to rebalance the trading relationship with China. Beijing have reiterated their willingness to hold a firm line against the U.S. The standoff is back at the forefront of dealers' minds and it has prompted some investors to take some money off the table," said David Madden, market analyst at CMC Markets UK, in a note.

How are other markets trading?

The yield on the 10-year U.S. Treasury note (http://www.marketwatch.com/story/treasury-yields-extend-decline-after-may-cpi-data-2019-06-12) retreated one basis point to 2.121%.

Asian markets traded down Wednesday (http://www.marketwatch.com/story/asian-markets-retreat-hang-seng-sinks-amid-hong-kong-protests-2019-06-11), with Japan's Nikkei 225 losing 0.4%, China's Shanghai Composite index sliding 0.6%, and Hong Kong's Hang Seng index retreating 1.7%, amid civil unrest in the semi-autonomous territory. European stocks were also trading lower, as evidenced by the 0.3% decline in the Stoxx Europe

In commodities markets, the price of crude oil (http://www.marketwatch.com/story/gold-renews-climb-spurred-on-by-weaker-stocks-and-worrisome-geopolitical-headlines-2019-06-12) slid 2.8%, while gold (http://www.marketwatch.com/story/gold-renews-climb-spurred-on-by-weaker-stocks-and-worrisome-geopolitical-headlines-2019-06-12) jumped 0.5%. The U.S. dollar , meanwhile, edged higher against its peers.

 

(END) Dow Jones Newswires

June 12, 2019 11:27 ET (15:27 GMT)

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