U.S. Stocks Snap Winning Streak on Renewed Concerns over Trade, Government Shutdown

Strong earnings have been carrying the markets higher for about two weeks, but mixed results on Wednesday gave investors an excuse to book profits. The stock market appears to be vulnerable at this time so prices could retreat further if more companies continue to miss the mark on earnings.
James Hyerczyk
U.S. Stock Indexes

The major U.S. stock indexes finished lower on Wednesday in a lackluster trade amid mixed quarterly earnings results and after President Trump’s State of the Union address failed to whet investor appetite for risky assets. Better-than-expected U.S. Trade Balance data also failed to stimulate buyers, while concerns over another potential government shut down later this month encouraged some investors to pare positions.

In the cash market, the benchmark S&P 500 Index settled at 2731.61, down 6.09 or -0.23%. The blue chip Dow Jones Industrial Average closed at 25390.30, down 21.22 or -0.09% and the tech-based NASDAQ Composite finished at 7375.28, down 26.80 or -0.38%.

The S&P 500 Index ended a five-day winning streak and the Dow Jones Industrial snapped a three-day winning streak.

Earnings, Earnings, Earnings

Strong earnings have been carrying the markets higher for about two weeks, but mixed results on Wednesday gave investors an excuse to book profits. The stock market appears to be vulnerable at this time so prices could retreat further if more companies continue to miss the mark on earnings.

The highlight of the session was the choppy, two-sided trade. This was a reflection of the action in a few individual stocks. General Motors reported better-than-expected results along with Walt Disney and Snap. General Motors shares rallied 1.6 percent and Snap surged 22 percent, but Walt Disney slipped 1.1 percent.

According to FactSet, more than 55 percent of S&P 500 companies have posted quarterly results through Wednesday morning. Of those companies, 68 percent have beaten expectations.

Trump Fails to Excite Investors

President Trump may have addressed issues like infrastructure spending, drug pricing and trade, but his remarks were basically a reiteration of previous concerns. Investors weren’t too impressed by his comments over infrastructure spending and drug prices. However, chatter over trade with China and the building of the wall on the U.S.-Mexico border continued to garner attention.

Regarding China, the President said the two economic powerhouses are working on a new deal, but also noted it must “include real, structural change to end unfair trade practices, reduce our chronic trade deficit, and protect American jobs.”

Trump may have softened his tone around funding for a border wall, but investors know that this issue could lead to another partial shutdown of the government later this month. This may have created some of the uncertainty that encouraged investors to take profits and trim long positions.

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