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Stocks rebound on positive trade rhetoric but close off highs
14-May-19 16:15 ET
Dow +207.06 at 25532.05, Nasdaq +87.47 at 7734.47, S&P +22.54 at 2834.41

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[BRIEFING.COM] The S&P 500 advanced as much as 1.5% on Tuesday on positive U.S.-China trade rhetoric. The broad-based rebound effort, however, lost steam into the close, leaving the S&P 500 up 0.8% for the session.

The Dow Jones Industrial Average gained 0.8%, the Nasdaq Composite gained 1.1%, and the Russell 2000 gained 1.3%.

The stock market began the day modestly higher, propped up by friendly trade chatter between the U.S. and China. The market liked that both sides expressed intentions to continue to work on a trade deal, which helped foster a belief that the recent dip in stocks was a good buying opportunity.

The market also liked President Trump's comments on the matter, although they weren't particularly new or substantive. President Trump touted his relationship with President Xi as "extraordinary" and described the current trade dispute as a "little squabble." According to Mr. Trump, he will meet with President Xi at G-20 next month.

The lighter tone on trade led investors to pick up some of the more beaten-up stocks within the S&P 500 information technology (+1.6%), energy (+1.1%), industrials (+1.1%), and consumer discretionary (+0.9%) sectors. The utilities sector (-0.9%) was the lone sector with a loss after it was the only group to finish higher yesterday.

In corporate news, Comcast (CMCSA 42.91, +0.63, +1.5%) agreed to give Walt Disney (DIS 133.20, +1.86, +1.4%) immediate and full operational control of Hulu. Disney will also be able to buy Comcast's stake in Hulu in 2024 at a valuation of at least $27.5 billion. Uber (UBER 39.96, +2.86) was a notable standout, increasing 7.7% after a rough start as a public company.

The U.S. Treasury market was more reserved on Tuesday, registering modest declines amid the rebound in equities. The 2-yr yield increased two basis points to 2.20%, and the 10-yr yield increased one basis point to 2.42%. The U.S. Dollar Index increased 0.2% to 97.53. WTI crude rose 1.2% to $61.84/bbl, bolstered by increased concerns about supply disruption in the Middle East.

Reviewing Tuesday's economic data, which included Import and Export Prices for April and the NFIB Small Business Optimism Index for April:

Import prices increased 0.2% month-over-month and declined 0.1% excluding fuel. Export prices rose 0.2% and were up 0.4% excluding agricultural exports. On a yr/yr basis, overall import prices declined 0.2%. Excluding fuel, they were down 0.9%. Export prices were up just 0.3%, versus 3.7% for the 12-months ending in April 2018, and up only 0.7% excluding agricultural products, versus 3.9% for the 12 months ending in April 2018.
The key takeaway is that import prices declined, creating another data point that shows a lack of worrisome inflation pressure.
The NFIB Small Business Optimism Index for April increased to 103.5 from 101.8 in March.

Looking ahead, investors will receive the following economic reports on Wednesday: Retail Sales for April, the weekly MBA Mortgage Applications Index, the Empire State Manufacturing Survey for May, Industrial Production and Capacity Utilization for April, Business Inventories for March, and Net Long-Term TIC Flows for March.

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