Stocks edge lower, pausing after Friday’s big gains

Business For Breakfast Denver radio
January 7, 2019
Nasdaq rallies as U.S.-China trade talks resume
January 7, 2019

Stocks edge lower, pausing after Friday’s big gains

Stocks open mostly lower following Friday’s massive rally, as trade talks between the U.S. and China resume today in Beijing for a two-day meeting; Dow -0.5%, S&P -0.1%, Nasdaq +0.3%.

“The January effect will likely continue, but the market will be erratic as the trade talks continue,” says Peter Cardillo, chief market economist at Spartan Capital Securities. “The real key is trade. Any sign that trade talks are going well could send the market to the upside.”

European bourses are lower, with Germany’s DAX -0.4%, U.K.’s FTSE -0.5%and France’s CAC -0.6%; in Asia, Japan’s Nikkei finished +2.4% and China’s Shanghai Composite closed +0.7%.

In the U.S., the consumer discretionary (+0.8%) and real estate (+0.6%) groups show solid early gains, while the utilities (-0.9%), consumer staples (-0.7%), energy (-0.5%) and financial (-0.5%) sectors drag on the broader market.

In M&A news, Eli Lilly (-1.5%) announced it will acquire Loxo Oncology (+66.2%) for $235/share in cash, or ~$8B.

U.S. Treasury prices edge higher, pushing the yield on the two-year note down a basis point to 2.47% and on the benchmark 10-year note 2 bps lower to 2.64%; the U.S. Dollar Index -0.4% to 95.79.

U.S. WTI crude oil extends last week’s rally, +1.3% to $48.58/bbl.

Still ahead: factory orders, ISM non-manufacturing index