FYI: U.S. stocks fell and bond yields slipped again Tuesday as guarded investors hedged their bets on whether the U.S. and China are working toward de-escalating their trade spat.
All three major indexes fell into the red, slipping from their morning highs, as shares of banks, technology, industrial and energy companies relinquished their gains. Losses accelerated in afternoon trading as investors stepped up their buying of haven assets, like gold and U.S. Treasurys, which tend to be more durable during periods of economic turbulence.
The stock market’s struggle to extend Monday’s big gains underscored investors’ apprehension that the U.S. and China are working to avoid further escalations in trade tensions, analysts said. The more optimistic tone President Trump struck at the Group of Seven summit, suggesting the two global heavyweights are open to talks, helped fuel the Dow Jones Industrial Average’s roughly 270-point advance on Monday.
The Dow industrials slid 120 points, or 0.47%, to 25777, while the S&P 500 declined 0.33%. The Nasdaq Composite also fell, sliding 0.34%.
That level of uncertainty has given investors little confidence stocks can march firmly higher, analysts said, contributing to their flight to less risky assets, like gold and bonds. Nearly 40% of investors surveyed by the American Association of Individual Investors’ last week said they expect stocks to fall over the next six months, while just 27% had a more favorable view on the market.
On Tuesday, most S&P 500 sectors reversed their earlier gains, as investors accelerated their buying of bonds, gold and other haven assets. Shares of banks, pressured by the drop in bond yields, and energy firms led the broad index lower.
Notable decliners included J.M. Smucker , which fell 8.4% in recent trading after the food company reported earnings that fell short of analysts’ expectations and lowered its guidance for the year.
Shares of Philip Morris International also slid, falling 7.6%, following reports the tobacco giant is in talks to merge with Altria Group , which fell 4%.
Bond yields, meanwhile, fell further. The yield on the 10-year U.S. Treasury note fell to 1.478%, according to Tradeweb, from 1.545% a day earlier, while two-year Treasury yields were at 1.524%, down from 1.558%. The spread between the two maturities remained inverted, a situation that has often preceded recessions.
Some stocks, however, managed to buck the broader market moves and notch a gain. Health-care giant Johnson & Johnson added 1.8% after an Oklahoma judge ordered the company to pay $572 million for contributing to the state’s opioid-addiction crisis. Investors had been expecting a bigger penalty, helping to send the stock higher, some analysts said.
Costco Wholesale added 4.1% after reports that crowds at its first mainland China store were so large that it had to shut early, suggesting the company’s ongoing international expansion is meeting success.
Elsewhere, stocks mostly rose around the world. The Stoxx Europe 600 added 0.6% thanks to strong regional gains in Germany, Spain and France.
In Asia, the Shanghai Composite added 1.4% and Japan’s Nikkei climbed 1%. Hong Kong’s Hang Sang was the outlier in Asia, dropping 0.1% amid ongoing political uncertainty about its future relations with China after three months of protests in the city.
Regards,
Ted
Bloomberg Evening Briefing:
https://www.bloomberg.com/news/articles/2019-08-27/your-evening-briefingMarketWatch:
https://www.marketwatch.com/story/stock-futures-seesaw-as-investors-gauge-trade-fight-economic-data-2019-08-27/printWSJ:
https://www.wsj.com/articles/global-stocks-seesaw-on-trade-hopes-weak-economic-data-11566893279Bloomberg:
https://www.bloomberg.com/news/articles/2019-08-26/asia-stocks-seen-higher-as-trade-mood-swings-again-markets-wrap?srnd=premiumIBD:
https://www.investors.com/market-trend/stock-market-today/major-stock-indexes-head-south-kirkland-lake-costco-stock-buck-trend/CNBC:
https://www.cnbc.com/2019/08/27/us-stocks-investors-monitor-us-china-trade-developments.htmlReuters:
https://uk.reuters.com/article/us-usa-stocks/wall-street-treads-water-as-financials-fall-trade-hopes-flicker-idUKKCN1VH1C4U.K:
https://uk.reuters.com/article/uk-europe-stocks/italian-rally-thrusts-european-shares-higher-ftse-100-lags-idUKKCN1VH0M6Europe:
https://www.cnbc.com/2019/08/27/europe-stock-market-trade-war-fears-fade-after-trump-g7-comments.htmlAsia:
https://www.cnbc.com/2019/08/27/asia-markets-august-27-us-china-trade-oil-currencies-in-focus.htmlBonds:
https://www.cnbc.com/2019/08/27/us-treasurys-investors-monitor-trade-developments.htmlCurrencies:
https://www.cnbc.com/2019/08/26/forex-markets-us-china-trade-war-in-focus.htmlOil:
https://www.cnbc.com/2019/08/27/oil-markets-us-china-trade-in-focus.htmlGold:
https://www.cnbc.com/2019/08/27/gold-markets-us-china-trade-war-in-focus.htmlWSJ: Markets At A Glance:
https://markets.wsj.com/usMajor ETFs % Change:
https://www.barchart.com/etfs-funds/etf-monitorSPDR's Sector Tracker:
http://www.sectorspdr.com/sectorspdr/tools/sector-trackerSPDR's Bloomberg Sector Performance Pie Chart:
https://www.bloomberg.com/markets/sectorsCurrent Futures:
https://finviz.com/futures.ashx 
