Dow slips after Commerce Secretary says US and China still far away on trade deal
The Dow Jones Industrial Average opened lower on Thursday after Commerce Secretary Wilbur Ross said China and the U.S. were not close to striking a trade deal.
The 30-stock index dipped 14 points. The S&P 500 also traded marginally lower. The Nasdaq Composite outperformed, rising 0.2 percent.
Ross told CNBC’s “Squawk Box” that the U.S. is “miles and miles” from a trade deal with China, adding the two countries have “lots and lots of issues.”
His comments come as China and the U.S. try to strike a trade deal before the beginning of March. If they don’t, additional U.S. tariffs on Chinese goods will come into effect. The two countries have been engaged in a trade war since last year.
“This clearly remains the largest unresolved geopolitical force for the US equity market,” said Michael Shaoul, chairman and CEO of Marketfield Asset Management, in a note. “Most of the market moves this week were driven by competing headlines regarding the US/China trade dispute.”
Solid earnings reports helped lessen the blow from Ross’ comments on Thursday. Bristol-Myers Squibb, American Airlines and JetBlue were among the companies that posted better-than-expected earnings. Results from Citrix and Texas Instruments also topped estimates.
The earnings season continues later on Thursday, with Intel, Starbucks and Western Digital among the companies scheduled to report after the close.
“With the Q4 reporting season kicking into high gear, the results so far show a smaller earnings surprise than the substantial ones in Q1-Q3 of 2018,” writes Ed Yardeni, president and chief investment strategist at Yardeni Research. “However, the early reports are dominated by the banks and brokers, which were hurt by the market’s turmoil at year-end 2018.”
Investors also kept an eye on Washington as the U.S. government shutdown entered its 34th straight day.
House Speaker Nancy Pelosi said Wednesday that Democrats would block President Donald Trump from delivering his State of the Union address until the government reopened — an announcement that Trump complied with.
James Gorman, CEO at Morgan Stanley, said it will be “extremely negative” for the U.S. if the shutdown continues for much longer. “If it goes on through months of this year, it’s going to have an extremely damaging effect” on the U.S. economy, he said.
For now, the U.S. labor market appears to be holding up well. Weekly jobless claims fell to 199,000 last week, their lowest in 49 years.