US Stock Market Overview – Stocks Close Mixed, US Yields Continue to Invert

US stock prices whipsawed on Tuesday first moving higher but then declining in the wake of tweets from an editor at the Chinese state news outlet. All of the major averages closed in the red. Yields in the US continued to move lower as the US curve continues to invert. This points to an eventual recession. One hundred percent of the time, when the 2-year and 10-year yield invert, the US moves into recession. William Dudley of the Fed was on the tape, saying that the Fed will not bend to the will of President Trump. He actually accused the President of trying to use the Fed to fight his trade war. Phillip Morris and Altria announced they are in advanced talks to merge. Most sectors were lower, led down by consumer staples and energy, utilities bucked the trend in a down tape.

Philip Morris and Altria are Considering a Merger

Philip Morris and Altria Group Inc. are in advanced talks to merge, which would reunite two tobacco giants struggling with shrinking demand. The two businesses hold the same portfolio of cigarettes, including industry leader Marlboro. The products are sold by Altria in the US and Philip Morris internationally. A combination would create a $200 billion-plus company

Chinese Editor Hu Xijin Tweets About Trade

Tweeting has become the medium of choice to drive the markets as it relates to trade. China recently brought new tariffs, and bravado from President Trump escalated the trade war late last week. Eventually, a consolatory tone about trade negotiations helped calm riskier assets. Trump told reporters at the Group of Seven summit that the US and China had a very productive call, but this is now being called into question.

Hu Xijin editor of the Global Mail said that China has been taking substantial measures to stimulate their economy. They want to move forward and rely less on trade with the United States. This information helped buoy gold prices as concerns that a trade war could continue permeated the markets.

J&J Gets Better than Expected Deal

J&J rallied on Tuesday as an Oklahoma judge ordered Johnson & Johnson to pay $572 million for contributing to the state’s opioid-addiction crisis. More than 2,000 cases brought by state and local municipalities seek to hold drugmakers, accountable for widespread opioid abuse that began gaining public attention in the early 2000s. That flood of litigation coincides with intensifying efforts by the Justice Department to use data to investigate over-prescription of opioids by doctors. The settlement was better than expected providing the backdrop for J&J to rally.