U.S. stocks oscillated around the unchanged line on Tuesday as traders braced for a winter storm on the eastern seaboard and headlines were filled with the latest concerning President Donald Trump and his tough talk on trade tariffs.
Amid calls from his own party to walk back his stance, Trump affirmed his plan to go ahead with tariffs on steel and aluminum imports, admitted there would be exceptions for Mexico and Canada if NAFTA talks are successful and reiterated that the U.S. has been taken advantage of by its trading partners.
In the end, the Dow Jones Industrial Average gained a fraction, the S&P 500 gained 0.3%, the Nasdaq Composite gained 0.6% amid ongoing strength in big-cap tech stocks and the Russell 2000 gained 1.1%. Treasury bonds rallied, pushing yields down slightly. Meanwhile, gold gained amid the trade talk, oil slipped and the dollar declined.
Breadth was positive, with advancers outpacing decliners by more than a 2-to-1 ratio with 90 new highs and 34 new lows on the NYSE. Among the big movers, Target Corporation (NYSE:TGT) fell 6.3% after reporting weaker-than-expected Q4 earnings and issuing weak forward guidance amid profit margin pressure from spending to boost traffic, reinvigorate stores and bolstering its ecommerce presence.
Nine of eleven sectors finished in the green with materials leading the way with a 1.1% gain. Miner Freeport-McMoRan Inc (NYSE:FCX) gained 2.8%, while aluminum producer Alcoa Corp (NYSE:AA) nearly gained 3%. On the other hand, utilities were the laggards with Duke Energy Corp (NYSE:DUK) down 2.1%.
Among the tech stocks, Amazon.com, Inc. (NASDAQ:AMZN) gained 0.9%, Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) gained 0.6%, and Intel Corporation (NASDAQ:INTC) rose 1.9% on strength in semiconductors. Microsoft Corporation (NASDAQ:MSFT) lost 0.3%. Facebook Inc (NASDAQ:FB) fell 0.3%.
The trading action has become very technical in nature, with the Dow Jones suffering a 350-point swing today as the bulls and the bears battle for the 25,000 threshold. The Dow Jones also ended at exactly the 50% retracement level from the record high to the February panic low.
The bulls are doing their best to forget the unpleasantness about rising interest rates, higher inflation and a more hawkish Federal Reserve. They are also trying to believe that either a trade war would be good or that the Republicans in Congress can reel in Trump.
Neither are likely, with Trump aggressively bolstering his position in recent days (including threatening countervailing duties) and corporate profits over the past decades helped by globalization, outsourcing and access to foreign markets.
The Fed/rates/inflation story will come back to the forefront on Friday, as well, with the February jobs report on deck. Economists are looking for the unemployment rate to fall to 4% with average hourly wages potentially rising to a 3.0% annual rate.
Volume during this rebound has been unimpressive. And the price action has been too far, too fast. Watch for a retest of the February lows in the week to come.
Check out Serge Berger’s Trade of the Day for March 7.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
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