US Stock Market Overview – Stocks Join Global Rally; The VIX Drops 12%

US stocks rose Wednesday, continuing the rally in global markets as investors took a respite from worrying about instability in Hong Kong and a messy Brexit. Gold and oil prices moved higher along with natural gas buoying the miners and exploration companies. Stocks in Asia rallied following news that Carrie Lam, the CEO of the city, said she would formally withdraw the extradition bill that sparked a month’s long demonstrations that have hurt the territory’s economy. The Hang Seng, Hong Kong’s main equity Index rose 3.9% Wednesday, its biggest one-day gain since November. The US trade deficit narrowed less than expected in July as the trade war between the United States and China perpetuated. The VIX volatility index moved lower on Wednesday as stock prices moved higher.

The VIX Remains Rangebound

The VIX volatility index tumbled nearly 12% on Wednesday as stocks rallied, easing the need for protection. The VIX dropped but remains in a choppy upward range, with support near the 200-day moving average at 17.31. The VIX will likely remain rangebound ahead of Friday’s US employment report. Expectations remain upbeat for job seekers.

The Trade Deficit Narrows

The US international trade deficit came in at $54 billion for July, compared to expectations that it would narrow to $53.48 billion. The trade deficit with China decreased by $500 million in July to $29.6 billion, according to the Bureau of Economic Analysis. New tariffs on both US and Chinese goods were updated this weekend, dampening investor sentiment across the globe. The US trade deficit shortfall has increased by 8.2% to $28.2 billion from the same period in 2018, according to the BEA.

Corporate Bond Issuance Surges

Corporate bond issuance is surging, as companies look to take advantage of low-interest rates. Apple launched its first bond deal since 2017 and is looking to raise $4 billion to $5 billion with bonds ranging in maturity from three to 30 years. Twenty-one corporations with investment-grade credit ratings issued bonds totaling about $27 billion in the latest week.

Regulations Will Remain a Priority in the US

The central clearinghouse has agreed to pay a $20 million fine and strengthen its compliance programs to settle US regulatory investigations. Options Clearing Corp. will pay the penalty to two of its regulators, the Securities and Exchange Commission and the Commodity Futures Trading Commission.