US Stock Market Overview – Stocks Slip but Rebound From There Lows Follow Trump Comments

US stock prices tumbled on the open but rebounded during the session after the Dow dropped nearly 450 points. Stocks responded to comments from President Trump who said that a deal could still happen with China but tariffs were an excellent alternative. Most sectors were lower, led down by Materials and Technology, Healthcare bucked the trend. The US trade deficit widened in March less than expected. Producer prices were light and jobless claims rose more than expected but are still at very depressed levels.

The Trade Deficit Widened

The US trade deficit rose more than expected in March as demand for foreign goods buoyed imports, according to the US Commerce Department. The trade deficit rose 1.5% to $50 billion in March, compared to expectations that the trade deficit would grow to $50.2 billion from a revised $49.3 billion in February. The trade gap ballooned to $59.9 billion at the end of 2018, which was the largest gap in 10 years. Year to date the goods and services deficit declined by 3.7% as imports rose 1.1%. The rise in imports was driven by energy and crude purchases, which rose by about $1.4 billion. Meanwhile, a 39% surge in soybean exports in March helped drive American exports up 1%. This will likely decline if the trade despite continues.

PPI was Lighter than Expected

The labor department reported that PPI rose moderately in April. The producer price index for final demand increased 0.2% last month after jumping 0.6% in March. Year over year PPI increased 2.2%, unchanged from March. Expectatoins were for PPI to gain 0.2% in April rising 2.3% year over year. Core producer price pressures that exclude food and energy increased by 0.4% last month. That was the largest rise since January 2018 after being unchanged in March. Core PPI increased 2.2% in the 12 months through April after rising 2.0% in March.

Jobless Claims Rose More than Expected

The Labor Department reported that jobless claims decreased 2,000 to 228,000 for the week ended May 4. Data for the prior week was unrevised. Expectations were for jobless claims to fall to 220,000. The four-week moving average of initial claims, increased 7,750 to 220,250 last week.

Chevron Waves the White Flag

Chevron said it would not increase it bid for Anadarko. Paving the way for Occidental to purchase the firm. The emergence as the likely victor means it is now poised to swallow a company nearly its own size as it bulks up in the region. Chevron had agreed to purchase Anadarko for about $33 billion on April 12, but Occidental offered the oil company $38 billion on April 24. Chevron Chief Executive Michael Wirth said in an interview that his company could have outbid Occidental, but instead will take a $1 billion termination fee it negotiated as part of its earlier deal with Anadarko and return the cash to shareholders.