What's moving markets today: June 4, 2019
Federal Reserve Chairman Jerome Powell said the central bank would continue to watch developments on the trade front closely and act as appropriate to ensure sustained economic growth.
"We do not know how or when these issues will be resolved," Powell said of the trade war during a conference on monetary policy in Chicago.
On Monday, St. Louis Fed President James Bullard said that risks to economic growth from the trade turmoil and inflation below the Fed's 2% target could warrant an interest rate cut soon. This led stocks to turn higher.
Powell outlined three future challenges for the Fed, including its existing monetary policy strategy given the underperformance of inflation data, the central bank's toolkit, as well as its communication with the public.
Stocks are holding on to their gains after Powell's speech, with the Dow up 1%, or 246 points, the S&P 500 up 0.8% and the Nasdaq Composite up 0.9%.
Only one Dow stock is down -- Coca-Cola (KO) -- and the index as a whole is up 1.4%, or some 350 points.
Earlier, Federal Reserve Chairman Jerome Powell said that the central bank was monitoring matters of trade closely and would act "as appropriate" to sustain economic growth in the United States.
The Nasdaq was dragged down by worries over a regulatory crackdown on tech companies yesterday but rebounded today. With the exception of Facebook (FB) big tech is back back in the green today.
US Stocks started the day stronger on Tuesday, climbing across the board as investors set aside worries about the ongoing trade war.
The tech-heavy Nasdaq Composite started the day higher — recovering a bit after it fell 1.6% Monday. Investors were worried about a possible regulatory crackdown on big tech.
Cloud content company Box (BOX) was a notable underperformer in premarket trading and at the open, dropping more than 12% after slashing its revenue guidance.
Shares of Tiffany & Co. (TIF) slipped in premarket trading after the company reported a bigger-than-expected drop in sales, but rose about 5% at the open.
Resilience is the word in stocks this morning. Call it a pause for breath after the Nasdaq officially entered correction territory with Monday's decline, down 11% from the highs reached in May.
Hundreds of billions in market value have been stripped from the so-called FAANG stocks in the past few weeks, dragged down first by trade-war escalation and second by new scrutiny from Congress and federal regulators.
Markets look buoyant this morning but much of the headline chatter is negative. As the trade war worsens, China has warned its citizens against US travel.
The Secretary of State issued a harsh rebuke of China's human rights record on the 30th anniversary of the massacre of democracy protesters at Tiananmen Square.
In the middle of a trade war, America's top diplomat writes that in the years after the massacre "the United States hoped that China’s integration into the international system would lead to a more open, tolerant society. Those hopes have been dashed."
It's the first time I have heard a sitting US Secretary of State admit that 30 years of American strategy to invite China into the global system has failed.
Meantime, economists nervously eye economic data for signs of softening, as investors have fled to the safety of Treasury notes, pushing yields on the 10-year below 2.1% this week.
Remarkably with all that, the Nasdaq is still up more than 10% for the year, just ahead of the benchmark S&P 500 — up 9.58% — and the Dow — up 6.4% — for the year.
Looking for another sign of how fragile the global economy is? Shoppers aren't as willing to buy expensive bling in little blue boxes from Tiffany when they go on vacation.
Shares of Tiffany (TIF) fell 3% in early trading Tuesday after the high-end jeweler reported a drop in sales from a year ago that was bigger than expected. CEO Alessandro Bogliolo blamed the decline on a stronger dollar and "dramatically lower worldwide spending attributed to foreign tourists." Tiffany also noted that "continuing sales pressures" would weigh on results for the rest of the year.
The slowdown in tourist spending wasn't just a problem at the company's flagship store on Fifth Avenue in New York City either. Tiffany also cited weak demand from foreigners in the rest of the Americas, Japan and most of its Asia-Pacific stores.
One positive: The US trade war with China may not be hurting affluent consumers there just yet. Tiffany cited "strong growth in mainland China" as a bright spot.
The US dollar drifted to a three-week low on the back of yesterday's comments from St. Louis Fed President James Bullard, who said an interest rate cut could be warranted soon.
In the aftermath of Bullard's comments, the buck, measured by the ICE US Dollar Index, dropped to 97.115, according to Refinitiv.
The dollar last year benefited from the Fed's hiking strategy, as higher interest rates make a currency more attractive for investors.
Bullard's remarks were linked to risks to economic growth in light of the trade war, as well as domestic inflation that keeps underperforming the Federal Reserve's target. The St. Louis Fed boss is a voting member on the US central bank's monetary policy committee.
Fed Chairman Jerome Powell is due to deliver a speech this morning and market participants will be watching closely whether he will echo his colleagues rhetoric.
Box (BOX) shares sank nearly 18% in premarket trading after it slashed its revenue guidance for the rest of the year, per our Paul R. La Monica:
If the premarket losses hold after the open, the cloud management company will have wiped out all of its modest year-to-date gains.
Luxury electronics maker Bang & Olufsen is struggling. The Danish company's stock plunged 19% in Copenhagen after it said its revenue for the fiscal year ended May 31 was worse than anticipated.
It expects sales for the last financial year to have sunk 14%, worse than 10% the company previously expected.
Clearly our financial performance this year has not been satisfactory, and we are very disappointed with the development," CEO Henrik Clausen said in a release.
Clausen expects to "deliver profitable growth" this year.
Bang & Olufsen makes expensive electronics, such as $900 headphones and $10,000 televisions.
It was founded in 1925 building radios before expanding into other electronics, such as record and CD players. The company operates nearly 600 stores worldwide.
Shell (RDSA) said Tuesday that it anticipates spending $125 billion on dividends and share buybacks between 2021 and 2025.
The move suggests management believes the company is well positioned despite recent pressure on oil prices. Brent crude, the global benchmark, dropped more than 11% last month.
The company reaffirmed its commitment to its conventional oil and gas business, along with its investment in natural gas and chemicals, even as it pursues climate change standards.
Shell is the only major energy company that has committed to cutting emissions generated by both its activities and the products it sells. It said in December it would link executive pay to the goals.
The company's shares dropped 0.9% Tuesday.