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After The Close - The major indexes began the day in positive territory, but trading became mixed as the session wore on.

Although earnings season continues, investors are focusing more on the latest round of trade negotiations between the U.S. and China, which began today in Beijing. As the March 1st deadline for a deal between the two superpowers looms, many market participants are hoping a favorable resolution will help to reignite global economic growth. Also weighing on traders’ minds is the potential for another shutdown in Washington if the two sides of the aisle can’t come to terms. Altogether, volumes were lower than average throughout the session, as the market lacked direction at the start of the week.

At the closing bell, the Dow Jones Industrial Average was down 53 points, the S&P 500 was ahead by two, and the NASDAQ was up nine points.  Most of the 10 major market sectors ended the day right around the unchanged mark. The biggest declines came from telecommunications and utilities, which each shed about one-quarter of a percentage point. On the plus side, industrial issues gained about one-third of a percent.

Contrary to the performance of the major indexes and market sectors, and reflecting the very mixed nature of today’s trading, advancing issues outnumbered decliners by about 75%.

Elsewhere, oil prices dipped a little less than three-quarters of a percentage point, with light sweet crude at around $52.35 a barrel. This extended the decline from last week, with growing concerns over global demand, higher U.S. output, and a strengthening dollar putting pressure on prices.

Trading on the European bourses showed more positive sentiment, with the major markets spending the entire session on the plus side. Britain’s FTSE, France’s CAC-40, and Germany’s DAX all closed around a percentage point higher. – Mario Ferro

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

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Before The Bell - The first full trading week of February was an uneven one for Wall Street. The major equity indexes started the five-day stretch looking poised to extend the January rally, helped by rather supportive news from both the earnings and business beats, including a strong jobs report on February 1st. However, the tide of trading changed on Thursday morning on reports that President Trump and China’s President Xi had canceled their meeting to discuss the fractious trade relations between the world’s two biggest economies ahead of the fast-approaching March 1st deadline, when tariffs are scheduled to be increased. The growing sentiment that the two superpowers were making process on a new trade agreement quickly dissipated and Thursday’s selloff was followed by an uneven performance for equities on Friday.

For much of the final day of the trading last week it was looking like it was going to be a wire-to-wire win for the bears, as investors’ risk appetite for risk wavered. Early in the session, the investment community was unnerved by the thought that a trade deal now looked farther off than expected, and such perceived lack of progress may well have a detrimental effect on the global economy, which has shown signs of fatigue in recent months. Such sentiment was a big reason for the sharp equity market correction in the fourth quarter of 2018. However, in the final hour of trading, the buyers came back into the market, sensing some bargain hunting opportunities, and the early losses were either pared or completely retraced by the closing bell. At the conclusion of trading, the tech-heavy NASDAQ (up 10 points) and the broader S&P 500 Index (plus two points) were able to make their way their way back to positive territory, while the losses were pared to just 63 points on the Dow Jones Industrial Average. The Russell 2000 Index finished the session relatively flat. The last hour of buying helped the Dow 30; and the NASDAQ posted its seventh-consecutive winning week.

As noted, a good deal of the recent headline news has been supportive for equities. Of note, the fourth-quarter earnings season, which is starting to wind down with only a handful of big names, including Coca-Cola (KO Free Coca-Cola Stock Report) and Cisco Systems (CSCO Free Cisco Stock Report), still to report quarterly results. (Retailing giants Home Depot (HD Free Home Depot Stock Report) and Walmart (WMT Free Walmart Stock Report) issue results later this month.) So far so good for Corporate America and ultimately Wall Street, as with more than 75% of the S&P 500 companies reporting, nearly two-thirds of the group has surpassed bottom-line expectations.

Likewise, the news from the business beat has been mostly positive, headlined by nonfarm farm payroll growth of 304,000 positions in January. On the same day of the jobs report, we also learned that manufacturing activity climbed in the first month of 2019. That said, Wall Street may need to see a continuation of these trends if it is going to extended the equity market rally, especially if sentiment on global trade starts to sour.

Speaking of global trade talks, the week ahead may prove crucial in making progress toward a deal. Specifically, Chinese Vice Premier Liu He, U.S. Treasury Secretary Steven Mnuchin and trade representative Robert Lighthizer will hold high-level talks in Beijing. In addition to the trade news, the investment community will be keeping an eye on economic data and earnings news. On the latter front, we will get data from the aforementioned Dow-30 companies. Likewise, we will get some notable reports on the economy, including data on consumer and producer prices, retail sales, and industrial production. Would positive reports from the corporate and business beats be enough to offset the negative tidings on global trade negotiations that emerged late last week? We shall soon see, and perhaps such will not be needed as progress will be made between the aforementioned officials.

With less than a half hour to go before the commencement of the new trading week stateside, the equity futures are indicating a higher opening for the U.S. stock market. So far overseas, the trading has been bullish, with China’s Shanghai Composite closing nicely higher overnight, while the major European bourses are sporting gains as trading moves into the second half of the session on the Continent. (Japan’s equity markets were closed for a holiday.)  - William G. Ferguson

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