Stocks traded higher again Wednesday with the Dow Jones Industrial Average positioned for a seventh consecutive winning day as the European Central Bank (ECB) delved further into easy monetary, and amid news that trade tensions between the U.S. and China continue to thaw.
Given President Donald Trump’s Twitter (NYSE:TWTR) volatility, it’s wise to approach good trade news with some caution, but over the course of this week, some green shoots have emerged.
The White House pledge to push back some proposed tariffs on Chinese goods while China is promising to rollback some levies on U.S. imports in conjunction with upping purchases of American farm products.
Today, reports emerged that the White House has discussed offering some form of a limited trade pact to China. Whether or not that agreement is accepted remains to be seen, but the overarching issue is that both sides, at least for now, are showing willingness to work on trade deals.
In Europe, the ECB cut its benchmark lending rate to -0.5% and pledged to buy $22 billion worth of euro-denominated bonds per month.
Those headlines got us to the Nasdaq Composite gaining 0.30% today while the S&P 500 jumped 0.29%. The Dow Jones Industrial Average tacked on 0.17%. In late trading, 23 of the 30 Dow stocks, one of the better ratios this week, were trading higher.
First, the Bad News
Yes, there were some glum performances among Dow stocks today. For example, Caterpillar (NYSE:CAT) slipped about 1% after Wells Fargo downgraded the construction machinery maker to “market perform” from “outperform.” The bank also pared its price target on that Dow stock to $143 from $150.
“U.S. construction equipment demand is at or near peak, which will put downward pressure on earnings power,” said Wells Fargo.
On a technical basis, Caterpillar recently bumped into some overhead resistance and looking at the chart, the shares look primed to pull back over the near-term.
Speaking of analyst chatter hurting Dow stocks, Walgreens Boots Alliance (NASDAQ:WBA) was the worst-performing Dow stock today, sliding over 4% after Deutsche Bank analyst George Hill initiated coverage of the stock with a “sell” rating.
Hill had a tepid take on Dow stock UnitedHealth (NYSE:UNH), starting coverage of that laggard with a “hold” rating. Shares of UNH also finished lower today.
Bright Spots on the Dow
Visa (NYSE:V) was the best-performing Dow stock today, adding 1.71%. It looks like buyers stepped into the name after the shares pulled back following a record close last Friday. The stock had been nearly 4% over the past several days.
Shares of Walmart (NYSE:WMT) added nearly 1% after the largest U.S. retailer unveiled an expansion to its grocery delivering service. Priced at $98 annually, or $82 less per year than the fee on Amazon Fresh.
Whether its streaming entertainment or food delivery, pricing power matters. Companies that can offer it without disrupting the long case for their stocks usually get a boost from investors. Walmart plans to expand the new grocery delivery service to 200 metro areas across the country.
Walt Disney (NYSE:DIS) bounced back today as some of the concerns about Apple’s (NASDAQ:AAPL) streaming effort ebbed.
Disney has its own streaming plans, Disney +, and Credit Suisse says that if that offering can attract 10 million subscribers by the end of this year, that could bring double-digit upside for the stock.
DJIA Bottom Line
Central banks around the world are acting to prop up economies that are in far worse shape than the U.S., and it’s likely the Federal Reserve will follow suit to avoid having to act when it’s too late.
In comments made in Chicago today, former Federal Reserve Chair Janet Yellen affirmed that the Fed stands at the ready to shore up the world’s largest economy, which she still views as solid. However, she doesn’t believe the central bank will follow the ECB playbook of negative rates.
Todd Shriber does not own any of the aforementioned securities.
