U.S. stocks traded slightly lower Thursday as investors eyed drama in Washington over a whistleblower complaint alleging President Trump sought foreign election interference, while also focusing on a downbeat report on U.S.-China trade relations.
What are major indexes doing?
The Dow Jones Industrial Average DJIA, -0.38% fell 64 points, or 0.24%, to 26,908, while the S&P 500 index SPX, -0.46% lost 9 points, or 0.3%, to 2,975. The Nasdaq Composite Index COMP, -0.88% retreated 54 points, at 8,022, a loss of 0.54%.
The Dow Jones Industrial Average rose 162.94 points Wednesday to end at 26,970.71, up 0.6%, while the S&P 500 rose 18.27 points, or 0.6%, to 2,984.87. The Nasdaq Composite ended at 8,077.38 with a gain of 83.76 points, or 1.1%.
What’s driving the market?
Stocks drifted lower after the release of a whistleblower complaint from a member of the intelligence community that raised concerns about Trump’s relationship with Ukraine. Joseph Maguire, acting director of national intelligence, testified before the U.S. House Intelligence Committee about the complaint, which complaint alleged that President Trump used the power of his office to “solicit interference” from a foreign country in the 2020 elections.
Investors on Wednesday had largely brushed off the decision by House Democrats to begin a formal impeachment inquiry into Trump amid a controversy over his interaction with Ukraine’s president, but appeared reluctant to push stocks higher as political developments unfold.
“The market is completely dependent on where this testimony goes,” Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company told MarketWatch. Investors will be looking to see if the evidence could “push us toward a less market-friendly president in 2020,” he added. On the other hand, “If it ends up being a non-starter, the market could potentially close much higher.”
Stocks extended their declines after a Bloomberg report citing a government official who said that the U.S. is unlikely to extend a waiver allowing American firms to do business with Chinese telecom giant Huawei Technologies Co., when it is due to expire in November.
The Trump administration put Huawei on a list of entities that U.S. companies are restricted from dealing with, for national security reasons, in May, though it granted a temporary reprieve from some of these restrictions shortly thereafter, and extended the waiver for another 90 days in August.
The news appeared to deflate hopes for a quick trade deal that grew after Trump told reporters an end to the U.S.-China trade war could happen “sooner than you think” and repeated that China wants “to make a deal very badly,” on Wednesday afternoon. The Chinese Commerce Ministry confirmed China has made purchases of U.S. soybeans and pork ahead of trade talks due in October.
Analysts are divided on what impeachment proceedings might mean for trade negotiations. The immediate impact may be felt on chances for passage of the USMCA deal to replace Nafta. In addition, the White House and Congress must agree on a new spending deal Nov. 21 to prevent another government shutdown.
On the economic data front, new applications for jobless benefits rose by 3,000 to 213,000 during the week ended Sept. 21, above economist expectations of 211,000 according to a MarketWatch poll.
The final estimate for second-quarter GDP growth came in unchanged at 2% annualized, the Commerce Department said Thursday. Meanwhile, the U.S. trade deficit widened slightly in August to $72.8 billion but smaller than the $74 billion consensus, according to a MarketWatch poll.
The U.S. pending home sales index rose 1.6% in August from July and 2.5% year-over-year, according to the National Association of Realtors.
“Economic data this week, by and large, has been skewed to the negative,” said Sahak Manuelian, managing director of equity trading at Wedbush Securities, in an interview, about Thursday’s stock selloff. “I think we are taking a breather here into month end.”
A spate of Federal Reserve officials are making speeches Thursday. Dallas Fed President Robert Kaplan, a nonvoting member of the central bank’s interest-setting committee, advocated for more immigration to boost the economy during remarks at a conference Thursday morning. St. Louis Fed President James Bullard, a voter, spoke at a conference on minorities in banking.
Federal Reserve Vice Chairman Richard Clarida said that U.S. inflation targets reside within the central bank’s 2% target, while speaking at the San Francisco “Fed listens” event. San Francisco Fed President Mary Daly, a non-voter, spoke at noon. Minneapolis Fed President Neel Kashkari, also a non-voter, will speak at a town hall in Billings, Montana, at 2 p.m.
Which stocks are in focus?
Peloton Interactive Inc. PTON, -7.90%, a web-connected exercise-equipment company, priced its initial public offering at $29 a share, the top of the targeted range, but opened 6.9% below that level in trading Thursday morning on the Nasdaq Global Select Market.
How are other markets performing?
U.S. Treasury yields fell on Thursday as geopolitical jitters from Washington, Iran and the U.K. boosted demand for haven assets like U.S. government paper. The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, -3.05% fell 4.8 basis points to 1.684%.
In commodities markets, oil futures drifted lower Thursday, continuing to give back gains made in the wake of Sept. 14 attacks on Saudi production facilities as news reports cite progress in restoring output and U.S. inventories.rise. West Texas Intermediate crude oil prices for November delivery CLX19, -0.90% edged lower to about $56.10 a barrel.
Gold futures headed higher on Thursday, a day after a surge by the U.S. dollar prompted the precious metal to suffer its worst daily decline in nearly three weeks. Gold GCZ19, +0.06% rose to about $1,511 an ounce.. The U.S. dollar index DXY, +0.08%, meanwhile, gained against a basket of its peers, after posting its biggest one day rise in three months Wednesday.