By Mark DeCambre, MarketWatch , Joy Wiltermuth
Mnuchin says U.S. was '90% of the way there' on China trade deal
U.S. stocks clawed back some of the previous day's loss in early trade Wednesday as semiconductor shares scored a bounce from Micron Technologies's late-Tuesday quarterly results.
Comments from U.S. Treasury Secretary Steven Mnuchin suggesting that a Sino-American trade deal wasn't far from complete, also trigger some modest buying on Wall Street.
The Dow Jones Industrial Average was up 47 points, or 0.2%, to 26,595, those for the S&P 500 ) advanced 4 points, or 0.15%, at 2,921, while the Nasdaq Composite Index climbed 55 points, or 0.7%, to 7,940.
Mnuchin told CNBC (https://www.cnbc.com/2019/06/26/mnuchin-says-us-china-trade-deal-is-90-percent-complete.html) that Beijing and Washington are nearing a deal on tariffs. "We were about 90% of the way there (with a deal) and I think there's a path to complete this," he told the financial network in Bahrain.
The U.S. Treasury Secretary said he was "hopeful" that a deal could be struck as the market awaits a sideline conversation between President Donald Trump and Chinese President Xi Jinping at the Group of 20 gathering in Osaka, Japan, which kicks off on Friday.
Separately, President Trump, appearing on Fox Business on Wednesday said that he was happy to collect China tariffs if talks broke down.
Concerns about escalating trade tensions between the China and the U.S., the world's largest economies, have fed a sense of rising uncertainty about the health of the global economy, at least partly contributing to central banks across the world signaling a willingness to reinstitute a fresh wave of economic stimulus.
"Certainly, when we came in pre-open, futures were higher on the Mnuchin comments," said Sahak Manuelian, an equities trader at Wedbush Securities.
"It seems things are starting to fall off a bit."
On Tuesday, equity markets suffered one of the worst declines in about a month, led by a selloff in trade-sensitive informational technology shares, after the S&P 500 index last week saw a new record high. Even with yesterday's slide, the Dow Jones Industrial Average stands about 1% shy of its Oct. 3 record, while the tech-heavy Nasdaq Composite Index is within reach of its May 3 all-time closing high, despite giving up 121 points, or 1.5%, in the prior session.
Tuesday's slump came as Federal Reserve Chairman Jerome Powell, speaking at the Council on Foreign Relations in New York, signaled that an interest-rate cut in July is not a done deal, emphasizing that the central bank was still monitoring the economy and "grappling" with signs of weakness to avoid a knee-jerk reaction as it considers dialing back benchmark rates.
What's more, St. Louis Fed President James Bullard said he wasn't advocating for a too-aggressive cut of 50 basis point to key federal-funds futures rates when the Fed meets next month.
Wall Street currently has the odds of an interest rate cut in July at 100%, according to the CME Group's FedWatch tool.
Check out: Powell says the Fed is 'grappling' with whether to cut interest rates
"Positioning ahead of the G20 summit meeting between Trump and Xi could see investors want skin in the game ahead of what many feel could yield a very positive outcome," said Edward Moya, senior market analyst at brokerage Oanda, in a daily research note.
"A reset of talks is likely becoming the base case scenario and if we see a timeline put in place, we could see equities resume the march towards uncharted territory," he said.
There was more bad economic data on Wednesday, with durable-goods orders for May dropping 1.3%, weighed down by Boeing Co.'s (BA) woes from its grounded 737 MAX jets.
Check out: Durable-goods orders drop 1.3% in May, but business investment picks up in reassuring sign
A separate report on international trade in goods also showed the U.S. trade deficit climbed 5.1% for the same month, which was wider than expected.
Market participants may also be partly watching the White House after reports indicated that Special counsel Robert Mueller will testify before the House Judiciary and Intelligence committees on July 17. Democrats have been wanting to hear from Mueller personally, regarding his investigation into Russian interference in the 2016 election as well as possible obstruction of justice by President Donald Trump.
Which stocks are in focus?
Shares of Apple were in focus after the iPhone maker and tech giant acquired autonomous-driving startup Drive.ai , according to multiple reports. Apple confirmed the deal to both Axios and the San Francisco Chronicle (https://www.sfchronicle.com/business/article/Drive-ai-a-self-driving-car-startup-once-worth-14047625.php). Shares of Apple were up more than 2% in early action Wednesday.
Micron Technology rose 12% in early trade Wednesday after the memory-chip maker's results topped lowered expectations for the quarter, and executives forecast improvement in the fourth quarter even though actual numbers were shy of expectations.
That was good news for other semiconductor companies. Shares of Advanced Mico Devices(AMD) climbed 4%; Nvidia Corp. 5% and shares of exchange-traded semiconductor fund iShares PHLX Semiconductor ETF (SOXX) climbed 1.8%.
Shares of Boeing were up 1% in early action Wednesday.