The Dow lacked momentum on Tuesday, and stocks trended sideways for most of the session as bulls nervously mulled Trump's tactics on trade.
The Dow Jones managed to crawl its way further into record territory on Tuesday with a meager 60 point gain. With the focus almost entirely on Trump’s trade deal and no fresh headlines to tantalize investors, stocks were mainly moving sideways.
Aiding the Dow was a much firmer performance from Boeing (NYSE: BA), which steadied after a miserable open to the week on Monday.
Largely thanks to a firmer performance from Boeing (NYSE: BA), the Dow Jones Industrial Average was the best performer among the three most important US stock market indices.
Shortly after 3:20 pm ET, the Dow had gained 59.98 points or 0.21% to trade at 28,295.87.
The S&P 500 (+0.1%) and Nasdaq (+0.12%) followed closely behind, as the US stock market sought to cap a five-day winning streak with another record close.
Donald Trump elected to put a little pressure on the Federal Reserve on Twitter, outlining his persistent belief that the economy would greatly benefit if the FOMC were to ease monetary policy more aggressively than they have currently been doing.
A low volatility day in the Dow translated into another cautious session for the price of gold, which was mostly unmoved (-0.03%) from its open. Crude oil rallied over 1.2% and is now trading almost 7% higher for December at roughly $61.
In cryptocurrency markets, a 4% hit to the price of bitcoin saw the digital asset slide further away from the $7,000 price handle. The ethereum price dove more than 7%, turning negative for the year.
The stock market has rapidly priced in the good news of a US-China trade deal. Diving in headfirst, bulls are confident that this time things are different – and there won’t be a vicious whipsaw coming.
Unfortunately, in a comprehensive piece of analysis from ABN AMRO, the investment bank outlined its trepidation that the state of Trump’s phase one deal might not be as stable as it appears. The proposed agricultural purchases by China are an obvious sticking point, as economist Bill Diviney states in his report,
Official communication from China has so far been notably lacking in detail on the amounts imports from the US would rise by, and Chinese officials cautioned in a rare press conference last Friday that any increases ‘should be based on market principles and WTO rules’. This provides ample cover for any shortfall in import increases, and it would arguably be at the US’s discretion whether China will have done enough to fulfil its side of the bargain when the time comes.
Ultimately, this leaves Diviney to conclude that there’s a real threat the truce collapses, with Trump’s penchant for the unexpected ratcheting up the danger to an additional level. He concludes,
Such parameters defining the deal means trade relations will remain fragile, and while a step in the right direction, we fear the deal could be torn up if President Trump finds himself dissatisfied with the progress made next year
Evidently, such an outcome could have extremely negative connotations for an increasingly complacent Dow Jones.
It was a mostly positive day in the Dow 30, as Boeing (NYSE: BA) managed to arrest Monday’s concerning slide and recover by 0.4%. The resilience of the most heavily weighted stock in the Dow Jones was notable considering that news broke overnight that 737 MAX production was going to be halted in January.
Accompanying the obvious negative connotations for The Boeing Company, the lack of demand for the infamous jet is astonishingly expected to wipe as much as 0.2% off US GDP growth in the first quarter of the new year. Such a statistic demonstrates why BA stock is given such a prominent place in the Dow’s weighting.
Apple (NYSE: AAPL) is the top-performing Dow 30 stock this year. It continued inching its way towards an 80% gain with a small bounce (+0.25%) on Tuesday.
Notably, Goldman Sachs (NYSE: GS) has traded extremely firmly over the last five trading days, notching another 1.5% increase today despite a slight dip in US Treasury yields.
Last modified: March 4, 2021 2:40 PM