The S&P 500 traded higher last week on reports the U.S. and China agreed in principle to a Phase-One trade deal.
Possible Phase One deal
The market gained momentum on Thursday on reports that U.S. and Chinese trade negotiators agreed to a phase one trade deal in principle. However, President Donald Trump tweeted Friday morning that a Wall Street Journal report on the trade deal was “completely wrong.”
Stocks traded lower Friday morning amid confusion about Trump’s ambiguous tweet and the fate of the potential deal.
“I think the market reacted like there was going to be a deal,” said Shawn Cruz, a manager at TD Ameritrade.
“But if you look at the VIX (volatility index), it stayed up in the 15 range yesterday. If they had actually expected it to go through, it would’ve been closer to 12. If you’re looking at the U.S.-China trade deal, look at the VIX. That will tell you how the market feels about it. The market may buy equities, but they’ll be hedged, and that will keep the VIX up.”
The potential progress on the China deal comes after House Democrats and the Trump administration agreed to a deal on the United States-Mexico-Canada Agreement on Wednesday. The USMCA would replace the North American Free Trade Agreement, which Trump frequently criticized during his campaign as being unfair to the U.S.
More: Trade seesaw continues, but employment report provides good news
More: Stocks see rallies on trade war optimism, earnings wins
Democrats also announced two articles of impeachment against Trump on Tuesday, charging him with abuse of power and obstruction of Congress. Markets had minimal initial reaction to the news, as the impeachment was widely expected — and many experts believe the Republican-controlled Senate will not convict Trump.
On Wednesday, the U.S. Federal Reserve announced it would maintain interest rates at its current target range of between 1.5% and 1.75%. The updated Fed “dot plot” suggests Fed officials see no need for future rate changes in 2020 at this time.
Two days after it began trading on the Tadawul exchange in the largest global initial public offering in history, Saudi oil giant Saudi Aramco became the world’s first $2-trillion public company. Aramco’s IPO valued the company at about $1.7 trillion, but the stock initially surged more than 17% from its IPO price in its first two days of trading.
On Thursday, Conservative Party leader Boris Johnson definitively won a five-year term as U.K. prime minister in a landslide election victory. In his victory celebration, Johnson said he plans to move forward with the U.K.’s controversial Brexit on Jan. 31. Currencies and European markets moved sharply higher on the headline.
“There’s no longer a need for a complete consensus. They pretty much have the ability to do whatever they want. The market hates uncertainty, and they’ve got a better feel for what’s going to play out over there. It takes a lot of the volatility of not knowing what’s going to happen out of the equation,” TD Ameritrade’s Cruz said of the election results.
Earnings In Focus
Lululemon exceeded analyst earnings and revenue expectations for the third quarter on Thursday, but shares traded lower after the company disappointed Wall Street with its fourth-quarter holiday guidance.
Delta shares gained altitude after the company announced 2020 sales growth guidance of between 4% and 6%.
This week, investors will be watching for earnings reports from FedEx on Tuesday, Micron on Wednesday and Nike and Accenture on Thursday.
Analysts are anticipating S&P 500 earnings will fall for the fourth consecutive quarter, the first such streak of four down quarters in a row since the first half of 2016, according to FactSet.
Economic numbers
Following the possible phase-one deal with China, investors will now shift their attention to the People’s Bank of China for their latest interest rate decision, expected out on Thursday. On Friday, the U.S. Bureau of Economic Analysis will release its revised third-quarter U.S. GDP growth estimate as well.
Weekly business quiz
This business is a global holding company headquartered in New York City. It provides communications, information and entertainment products and services. Since its founding, it has established over 150 locations across 40 countries worldwide.
It was formed in the year 2000 through one of the largest mergers in U.S. business history. With the combined forces of two well-established corporations — Bell Atlantic and GTE — the first smartphone for customers was developed.
Just a year later, it would launch the first 3G network in the U.S., which would later be expanded to coverage across all 50 states. These networks would continue to be furthered many years later with the launch of its rural program, which provided 4G to remote areas that previously didn’t have access.
It continued to lead innovations throughout the early 2000s, creating the first cord-free headset known as the Jabra FreeSpeak. As its presence expanded with a calling plan across all of the North American continent, it was added to the Dow Jones Industrial Average index in 2004.
Soon it was competing on the global playing field as it acquired MCI, which provided an international long-distance network and several large corporate customers. Always aiming to provide the fastest services for customers, it recently launched its 5G network in 20 select cities across America.
Answer: Verizon Communications
Benzinga is a financial news and data company headquartered in Detroit.
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December 15, 2019 at 06:00PM
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Clarity comes to Brexit debate but US-China trade news confuses market - Detroit Free Press
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