NEW YORK, June 6 — US stocks treaded water today as hopes of a rate cut helped counter fears of a further escalation in the trade war with China following comments from President Donald Trump.
Trump said he would decide on more China tariffs “probably right after the G20,” which follows his threat overnight to hit tariffs on “at least” another US$300 billion (RM1.2 trillion) worth of Chinese goods.
“It feels like an escalation of tensions and may be an elongated trade war and we might have to recalibrate lower,” said Art Hogan, chief market strategist at National Securities in New York.
“We’re up significantly in two days, and at that place it doesn’t take much to roll markets over.”
The trade-sensitive industrial sector fell 0.3per cent, the most among the five major sectors trading lower.
Adding to the concerns, the European Central Bank marginally cut its growth forecasts for the next two years, acknowledging the risk that Europe’s slowdown will be longer and deeper than expected.
Markets have been roiled by worries of a global economic slowdown triggered by the ongoing US-China trade spat and the pervasive uncertainty has led top Federal Reserve officials, including Chairman Jerome Powell, to hint at a rate cut.
“There is an overarching belief that Chairman Powell is willing to, if need be, lower rates in the near term,” said Hogan.
The S&P remained on pace for its third straight session of gains, mainly on hopes of a more accommodative Federal Reserve.
At 9.45am ET, the Dow Jones Industrial Average was up 28.02 points, or 0.11per cent, at 25,567.59, while the S&P 500 was up 2.06 points, or 0.07per cent, at 2,828.21. The Nasdaq Composite was down 5.19 points, or 0.07per cent, at 7,570.29.
Energy stocks, the sector hardest hit by the recent escalation in trade tensions, rose 1.3per cent, the most among the major S&P sectors, as oil prices gained.
The biggest boosts to markets were oil majors Exxon Mobil Corp and Chevron Corp, both up about 1.5per cent.
Advanced Micro Devices Inc rose 4.2per cent after Morgan Stanley upgraded the chipmaker’s stock to “equal-weight” from “underweight”, citing near-term positive catalysts.
Goodyear Tire & Rubber Co climbed 3.2per cent after Longbow Research raised its rating on the tire-maker’s stock to “neutral” from “underperform”, saying impact of Mexico tariffs will be modest on the company for now.
Advancing issues outnumbered decliners by a 1.44-to-1 ratio on the NYSE and by a 1.09-to-1 ratio on the Nasdaq.
The S&P index recorded 44 new 52-week highs and no new low, while the Nasdaq recorded 31 new highs and 37 new lows. — Reuters
