After The Close - The stock market started briefly in the red today, as a continuation of the protests in Hong Kong spooked global markets. The Dow Jones Industrial Average was down by as many as 74 points, while the other composites started lower, as well. Too, the U.S. Treasury bond yields began with fresh declines, and the 2-year to 10-year spread was within a few basis points of an inversion. This often has been a signal of a possible recession. However, news soon broke from the White House that the tariffs on additional goods from China would be changing, both in scope and implementation date. Indeed, the new date for the tariffs to begin is now December 15th, while several items are no longer included on the list. These include laptops, videogames, toys, and certain shoes and clothing. This caused the market to jump considerably. Indeed, the Dow rose by more than 500 points in a little more than an hour, while the other indices showed substantial price increases, as well. The market traded in a sideways pattern for the rest of the day, and the indices close not far off of their session highs. All told, the Dow was higher by 373 points, the S&P was up by 43 points, and the NASDAQ climbed 153 points.

Market breadth was rather positive, as advancers outpaced decliners by a 2.4-to-1.0 ratio. Technology stocks were among the best performers on the day, as those companies are the likeliest to be helped by the delay in tariffs. On the other hand, REITs were among the weakest performers, barely breaking even on the day.

In commodity news, oil prices rose today, as expectations for higher global demand increased. Meantime, U.S. Treasury bond yields were higher across the board though the tightening between 2- and 10-year yields needs to be watched in the days ahead. The VIX Volatility Index was lower, though as demand for options protection fell.

Looking ahead, tomorrow will be full of economic reports. These include the Energy Information Administration’s weekly report on crude oil inventories. Plus, even though earnings season is winding down, a number of notable companies plan to release corporate reports, which to may change prevailing sentiment. This includes Dow-component Cisco Systems (CSCO Free Cisco Stock Report) after the close tomorrow. Too, any developments from the Fed or in the trade talks with China will likely affect trading tomorrow.  - John E. Seibert III

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


10:40 AM EDT - News that the United States has decided to delay implementing tariffs on China until December 15th, on a range of items from cellphones to clothing, has caused the stock market to turn on a dime. In all, the Dow Jones Industrial Average, which had eased incrementally to start the day, has soared more than 500 points as we pass the one-hour mark of trading.

This dramatic up move reverses a similar decline yesterday, when pessimism on a host of items ranging from our deteriorating trade relations with China, increasing protests in Hong Kong, and falling Treasury note yields at home has caused the market to swoon. Now, all of that seems like ancient history.

In delaying the tariffs from September 1st to December 15th, the United States Trade Representative cited "health, safety, national security and other factors." Technology stocks soared on this move, as did the shares of key retailers. Also at home, bond yields rose, with the 10-year note, which had seen its yields fall to 1.63% climbing back up to 1.69%.

All told, as we close in on the end of the first hour of trading, the Dow is up 515 points; the S&P 500 is ahead 59 points; and the NASDAQ is better by 175 points. It is a veritable buying stampede at this hour. – Harvey S. Katz, CFA

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


Before The Bell - The stock market opened the new week sharply to the downside, following a moderate setback on Friday, under pressure from the continuing trade war with China, which seems, if anything, to be getting worse, and on news that Hong Kong International Airport had cancelled all departures for the day as a result of continuing unrest in that city. The anti-government protests have been going on at the airport since last week. But the overriding issue remains our inability to fashion a trade deal with China.

The trade concerns are raising the specter of a possible recession in both China and the United States, with more bearish, or at least cautious economic projections being voiced by leading brokerage houses. As a result, after a sharp drop in the U.S. equity futures in the pre-market hours, a mixed showing overnight in Asia, and modest reversals in Europe early in yesterday's session, our stock market opened to the downside, with the Dow Jones Industrial Average quickly losing triple digits.

After pushing down to a loss of just over 230 points within the first hour, the Dow, as has been its pattern this year, regrouped and the losses narrowed, so that after the first hour of trading, the blue chip index would be off by just 130 points. The other indexes also would be down in similar fashion. However, the recovery did not continue as the morning wound down and the afternoon got under way. In fact, the problems of the trade rift and the protests in Hong Kong were deemed so worrisome that the Dow would falter anew.

In all, as the afternoon proceeded, the blue chip would tumble by more than 300 points. The major industrials and many key retailers, which would be affected mightily by the new tariffs took it on the chin. Worse, the bank stocks were getting hit hard, as falling Treasury note yields were raising the risk and odds of a recession. Bank of America (BAC), for example, now says that there is about a 30% chance of a downturn in the next year. We currently think such odds are a bit exaggerated, but trade wars carry risks.

Meanwhile, the losses continued, surpassing 450 points on the Dow and approaching 120 points on the NASDAQ as we approached the final hour of trading. Also falling, as noted, were Treasury note yields, tumbling yesterday to their lowest levels since 2016. The setback would continue into the rest of the afternoon, with stocks mounting no late comeback as has been its pattern for so long. Summing up, it was the worsening protests in Hong Kong, the intensifying trade with China, and falling bond yields that took the measure of Wall Street yesterday.

Now, a new day begins and after yesterday's increasing geopolitical tensions and intensifying recession fears took the U.S. stock market down sharply, we see that stocks were lower in Asia in the overnight hours on further unrest in Hong Kong. In Europe, in the meantime, the early read on the bourses is negative, as well. Also, oil prices are off slightly and Treasury note yields are nominally weaker. Finally, after yesterday's sharp retreat, the U.S. equity futures are pointing to a lower start to the new trading day. – Harvey S. Katz, CFA

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.