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Stocks - Wall Street Bounces Back in Break From Trade-Induced Selloff

Stock MarketsMay 30, 2019 09:42AM ET
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Investing.com - U.S. stocks bounced on Thursday as risk-off sentiment took a breather.

The Dow Jones gained 66 points, or 0.3%, to 25,192.39 points by 9:37 AM ET (13:37 GMT), while the S&P 500 rose 11 points, or 0.4%, 2,794.30 points and the tech-heavy Nasdaq Composite traded up 33 points, or 0.4%, at 7,579.12 points.

Escalating trade tensions between Washington and Beijing have sent the S&P 500 lower in four of the previous five sessions and the global benchmark is on track for a monthly loss of more than 5%.

Investors remained focused on trade related developments after China’s Vice Foreign Minister said Thursday that provoking trade disputes amounted to “naked economic terrorism”.

It came a day after Chinese newspapers warned that Beijng could use rare earth exports to strike back at the U.S. after President Donald Trump said he was "not yet ready" to make a trade deal.

Little sign of an imminent end to the ongoing trade dispute convinced investors to remove money from riskier assets such as stocks and rotate to safe haven assets such as government debt. Concerns are that the negative impact from the continuing rift between the world’s two largest economies could exacerbate the current global slowdown, leading to recession.

Amid the flight to safety, benchmark 10-year U.S. Treasury yields, which trade inversely to prices, hit 2.210% overnight, their lowest since the middle of September 2017.

The yield curve between three-month bills and 10-year notes also remained inverted, a phenomenon often considered to be a leading indicator of a pending recession.

Yet economic data released Thursday remained solid. The updated data for U.S. gross domestic product met forecasts for a slight downward revision to 3.1%, still a healthy level of growth.

The labor market also remained strong with weekly jobless claims beating expectations.

Pending home sales, out at 10:00 AM ET (14:00 GMT), are forecast to have risen 0.9% in April.

Federal Reserve officials have maintained their stance that the current level of interest rates is appropriate, but markets have grown more skeptical in the face of that standoff between China and the U.S.

Fed fund futures now price in a 25-basis-point cut for September with an additional quarter-point decrease at the beginning of 2020.

Fed Vice Chairman Richard Clarida will have the opportunity to present his outlook when he speaks in New York on the topic of "Sustaining Maximum Employment and Price Stability" at 12:00 PM ET (16:00 GMT).

Outside of equities, the U.S. dollar index, which measures the greenback against six rival currencies, advanced 0.1% at 98.14 by 9:39 AM ET (13:39 GMT), while the yield on the 10-year Treasury edged forward 2.3 basis points at 2.264%.

In commodities, gold futures fell $1.30, or 0.1%, to $1,279.70 a troy ounce, while crude oil gained 21 cents, or 0.4% at $59.02 a barrel.

Stocks - Wall Street Bounces Back in Break From Trade-Induced Selloff
 

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Antonio Velardo
Antonio Velardo May 30, 2019 11:10AM ET
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Bouncing?
Marshall Hiepler
Marshall Hiepler May 30, 2019 10:33AM ET
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Pending Home Sales analysis provides an indication of the strength of the US dollar? I've got a better analysis: As the working class grows increasingly inept at managing their incomes, less able to utilize self control in their spending habits, and more often than not ... living paycheck to paycheck with little or no savings (note: un-tapped credit card limit is not the same as "savings") the ability for middle class workers to purchase a home is pushed beyond their finacial horizon. Thus, home sales falter, while rentals flourish. I always advise others to save and invest their money, and to purchase a home, rather than renting one. However, make no mistake about it ... I own rental units, and I make money when Pending Home Sales data is poor. Knowing how to wisely invest ones' money, is not the same as having a desire to do so. Hence, the thriving rental income, when the "dollar is down". The US dollar is driven by a lack of social self control. Sadly, no one cares.
 
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