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Stock Market News for Dec 4, 2019

Wall Street plunged on Tuesday owing to uncertainty about a phase-one trade deal with China anytime in near future. Negative comments of President Donald Trump about a partial trade deal with China anytime soon significantly dented investors’ confidence on stock markets. All three major stock indexes plummeted.

The Dow Jones Industrial Average (DJI) plunged 280.23 points or 1% to close at 27,502.81. The S&P 500 plummeted 0.7% to close at 3,093.20. Meanwhile, the Nasdaq Composite Index closed at 8,520.64, shedding 0.6%. The fear-gauge CBOE Volatility Index (VIX) jumped 7% to close at 15.96. A total of 7.41 billion shares were traded Monday, higher than the last 20-session average of 6.83 billion. Decliners outnumbered advancers on the NYSE 1.63-to-1 ratio. On Nasdaq, a 1.65-to-1 ratio favored declining issues.   

How Did The Benchmarks Perform?

The Dow closed in negative territory with 26 components of the 30-stock blue-chip index closing in the red while 4 ended in green. Trade sensitive stocks like Caterpillar Inc. CAT and Apple Inc. AAPL declined 2% and 1.8%, respectively.  Apple carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The tech-laden Nasdaq Composite ended in the negative territory due to weak performance of tech stocks, especially semiconductor producers. The S&P 500 also finished in the red. The Energy Select Sector SPDR (XLE), the Industrials Select Sector SPDR (XLI) and the Financials Select Sector SPDR (XLF) lost 1.5%, 1.1% and 1.4%, respectively.  Notably, nine out of total11 sectors of the benchmark index closed in the red.

U.S.-China Phase-One Trade Deal in Jeopardy

On Dec 3, President Trump said at NATO summit in London that his administration may consider postponing the phase-one trade deal with China until the completion of 2020 U.S. Presidential election. Notably, the election is scheduled on November 2020.

According to Trump, “In some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we will see whether or not the deal is going to be right.” He further clarified, “I have no deadline, no ... In some ways, I think it is better to wait until after the election if you want to know the truth.”

Moreover, Fox News reported that Washington is still on its track to implement a fresh tariff of 15% on $160 billion of additional Chinese goods, which are mostly used as inputs for final consumer products. The new sets of tariffs are expected to be effective on Dec 15. To make the situation worst, U.S. Commerce Secretary Wilbur Ross said that he expects only staff-level trade talks between the U.S. and China to continue. However, no high-level discussions between the two countries are scheduled before the Dec. 15 deadline.

More Tariff Wars

On Dec 2, President Trump said that he will restore on U.S. steel and aluminum imports from Brazil and Argentina effective immediately. The U.S. government implemented 25% tariff on imported steel and 10% duty on imported aluminum on Mar 1, 2018.

According to Trump, “Brazil and Argentina have been presiding over a massive devaluation of their currencies, which is not good for our farmers.” Trump also insisted the Fed to prevent countries from gaining an economic advantage by devaluing their currencies.

The U.S. government has also decided to impose retaliatory tariffs on France since the later has imposed digital tax, which the Trump administration believes will hurt business interest of U.S. tech behemoths. The U.S. government has proposed levying duties of up to 100% on $2.4 billion French products, including sparkling wine, cheese, and other goods.

Stocks That Made Headline

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Canadian National Railway Co. CNI lowered its outlook for 2019 earnings as the eight-day strike significantly affected operations, forcing it to run on a capacity of only 10%. (Read More)

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