Dow Futures Jump but a Trump Tirade Could Torpedo the Stock Market

November 15, 2019 11:43 UTC
  • Dow Futures are up Friday thanks to positive trade war-related comments from Larry Kudlow.
  • Kudlow, however, has mentioned that the deal isn’t done yet, and that uncertainty could be bad news for the stock market.
  • Weak retail sales numbers and hurdles in the way of the trade deal could negatively impact the Dow today.

Futures on the Dow Jones Industrial Average (DJIA) are up Friday after White House economic adviser Larry Kudlow told Bloomberg late Thursday the U.S. and China are close to signing a trade deal.

Speaking to reporters after an event at the Council on Foreign Relations, the White House official remarked:

We are coming down to the short strokes. We are in communication with them every single day right now.

The comments from the chief of the National Economic Council came after a gathering of top trade advisers of President Trump, who had met to discuss the U.S.-China trade deal. Not surprisingly, Kudlow’s comments have sparked a wave of enthusiasm as the Dow’s spike this morning suggests.

However, a stock market rally is not guaranteed despite early positive signs as Kudlow did say that the deal is “not done yet.” This adds to the uncertainty around the signing of a firm trade deal between the two nations as a host of problems seem to have cropped up.

This is why higher Dow futures this morning could easily give way to a disappointing day for the stock market if no more concrete information emerges on a potential deal – similar to what had happened yesterday.

Dow futures record early gains thanks to Kudlow

Dow Jones Industrial Average futures are up 73 points, or 0.26 percent, as of 5.31 am ET to 27,819 points. The Dow had closed Thursday at 27,782 points, which was nearly flat from the previous day’s close. Kudlow has given Dow futures a nice shot in the arm as the reading climbed sharply after his comments.

Dow Jones Industrial Average futures are up Friday after Kudlow’s trade deal comments. | Source: Yahoo! Finance

S&P futures and Nasdaq Composite futures are also up 0.24 percent and 0.34 percent, respectively.

The early gains might give way to stock market disappointment

The Dow’s positive reaction to Kudlow’s comments indicates that the stock market has been desperately looking for positive news on the trade deal front. Kudlow has given the market the ammunition it needs for a rally, setting the stage for the Dow to close the week on a high. But then, Kudlow’s comments did leave open room for uncertainty.

Fox Business quotes the Wall Street Journal saying that Trump is not yet ready to sign off on a trade deal just yet. That’s not surprising as Beijing is playing hardball and wants to be seen in good light, demanding a host of concessions so that it is on equal footing with Trump.

If Trump is unwilling to provide the concessions that Beijing is demanding, then there’s a good chance that the trade deal could eventually blow up. So any negative reaction from Trump with respect to the trade war will be bad news for the Dow and the stock market.

Meanwhile, stock market watchers will also keep an eye on the U.S. retail sales report that’s due out at 8.30 am ET. Retail sales for October are expected to increase slightly after a surprising fall in September. But if the data is not as per expectations, the Dow will find it difficult to sustain its early momentum for the rest of Friday.

This article was edited by Samburaj Das.

Last modified: November 15, 2019 12:19 UTC

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