Markets eked out gains on Wednesday even as investors feared that global economic weakness might spill over into the United States. The three major benchmarks ended in the green, with energy shares lifting up the S&P 500 and tech shares boosting the Nasdaq. Meanwhile, investors kept a close watch on the meeting between Trump and the congressional leaders over border wall funding.
The Dow Jones Industrial Average (DJI) increased almost 0.1%, to close at 23,346.24. The S&P 500 also increased 0.1% to close at 2,510.03. The tech-laden Nasdaq Composite Index closed at 6,665.94, gaining 0.5%. The fear-gauge CBOE Volatility Index (VIX) increased 0.8% to close at 25.62. A total of around 7.80 billion shares were traded on Wednesday, lower than the last 20-session average of 9.18 billion shares. Advancers outnumbered decliners on the NYSE by a 2.10-to-1 ratio. On Nasdaq, a 2.42-to-1 ratio favored advancing issues.
How Did the Benchmarks Perform?
The Dow nudged higher by 18.8 points on Wednesday to end the session in the green. Gains for the Dow were rather broad-based, with its top components like The Boeing Company BA and Chevron Corporation CVX gaining 0.4% and 1.8%, respectively.
Meanwhile, the S&P 500 rose 3.2 points to also end in positive territory. Of the 11 major sectors of the S&P 500, seven ended in the green. While the gainers were led by energy shares, the laggards were led lower by real estate shares.
The Energy Select Sector SPDR ETF (XLE) gained almost 2% on Wednesday, whereas the Real Estate Select Sector SPDR (XLRE) declined 2.3%. Shares of Cabot Oil & Gas Corporation COG gained 5.3%. Financial shares also helped the broad-based index, with shares of Barclays PLC BCS rising 0.8%.
Global Economic Data and Lighthizer’s Statements Made Investors Angsty
A spate of weak global economic data kept investors jittery on Wednesday. Health of the Chinese economy seems to be softening as was evident from the weak reading of its official manufacturing data. The Caixin manufacturing purchasing managers index declined to 49.7 last month – its lowest levels since February 2016.
Further, the German manufacturing sector also witnessed a slowdown. Markit’s purchasing manager’s index for Germany declined to 51.5, its 33-month low. Such weak economic reports sparked fears among investors that the global economic meltdown might soon spread over to the United States. The investors also speculated the possibility of an aggravation of the U.S-China trade war.
Meanwhile, per a report from The New York Times on Jan 1, U.S. Trade Representative Robert Lighthizer had told his friends and associates that President Trump should be wary of China’s “empty promises” concerning the trade war. He is of the view that the President should get better and meaningful trade concessions from trade war negotiations between the two countries. Investors closely followed such developments.
Trump Meets Congressional Leaders to Discuss Shutdown
Investors kept a close wathc on the meeting between Trump and the congressional leaders scheduled for Wednesday afternoon. The government has been observing a shutdown for the past 12 days as of Wednesday.
Officials from the White House invited both House and Senate leaders to attend the meeting which would discuss the border wall funding. This would be the first such meeting since the partial government shutdown came into effect.
Meanwhile, in economic data news, the IHS Markit’s U.S. Purchasing Manager’s Index for December, came in at 53.8, lower than the estimate of 53.9.
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