U.S. stock market poised to pull back as Wall Street watches China trade talks


U.S. stock indexes on Monday were staged for a subdued opening after a powerful rally Friday, as investors hoped for further signs of thaw in a protracted trade dispute between the U.S. and China—a tit-for-tat clash that has helped to weaken investor sentiment.

How are major indexes performing?

Futures for the Dow Jones Industrial Average

YMH9, +0.08%

were off by 10 points, or less than 0.1%, at 23,383, those for the S&P 500 index

ESH9, -0.05%

retreated 4.05 points, or 0.2%, at 2,527.25, while those for the Nasdaq-100

NQH9, -0.20%

fell 20 point to 6,414, a decline of 0.3%.

On Friday, the Dow

DJIA, +3.29%

rose 746.94 points, or 3.3%, to 23,433.16, while the S&P 500 index

SPX, +3.43%

advanced 84.05 points, or 3.4%, to 2,531.94. The Nasdaq Composite Index

COMP, +4.26%

advanced 275.35 points, or 4.3%, to 6,738.86.

Friday’s performance saved markets from what had been the worst start to a year for the Dow and S&P 500 since 2000, according to Dow Jones Market Data.

The Dow is up 0.5% on the year, the S&P 500 1%, while the Nasdaq has advanced 1.6% over the first three trading days of 2019.

What’s driving the market?

Senior officials from China unexpectedly attended negotiations between Beijing and their counterparts in Washington, in an effort to resolve longstanding trade disagreements that have underpinned uncertainty in global markets.

According to Bloomberg, Chinese Vice Premier Liu He, a top economic adviser to Chinese President Xi Jinping, was among attendees, some optimism has been drawn from the a top level official attended rather than lower-ranking officials.

The trade meetings come after U.S. markets shot higher after Friday’s jobs report showed that the U.S. economy added 312,000 new jobs in December, well above expectations for a gain of 182,000, according to a MarketWatch poll of economists. The strong headline number, along with data showing wages grew faster than expected, helped dampen fears that the Federal Reserve is being overly optimistic in its plans to continue raising interest rates in 2019.

Read: Powell signals he’s flexible on interest rates but not resigning if Trump asks

Still, markets are watching a partial government shutdown, now in its second week, with some government employees expected to see their first missed paycheck as a result of an impasse between President Donald Trump and Democratic lawmakers over funding for a U.S.-Mexico border wall.

Looking ahead, investors, including Apple Inc.

AAPL, +4.27%

have been sounding alarms that trade issues have begun to affect quarterly results and weaken China’s economy, a fact that could continue restrain any upward momentum for markets in coming weeks.

Elsewhere, British Prime Minister Theresa May set a Jan. 15 date for a parliamentary vote next week on her planned exit from the European Union, which she is widely expected to lose.

What are the analysts saying?

“The start of trading in the New Year has been ugly as companies begin to sound the earnings alarm, an obvious impact of the trade war. While we do expect a decrease in overall profits, it is obvious that multinationals will bear the brunt of the trade war as earnings miss their forecast,” wrote Peter Cardillo, chief market economist at Spartan Capital Securities, in a Monday research note.

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Source : MTV