Shares of Microsoft buoyed the blue-chip index
U.S. stocks closed near unchanged Thursday, giving up early gains scored following better-than-expected housing and manufacturing data a day after the second interest rate cut of 2019 by the Federal Reserve.
How are markets performing?
The Dow Jones Industrial Average DJIA, -0.19% fell 52.29 points, or 0.2%, to end at 27,094.79, while the S&P 500 index SPX, +0.00% clung to a gain of 0.09 point, or less than 0.1%, to close at 3,006.82. The Nasdaq Composite Index COMP, +0.07% added 5.49 points, or 0.1%, finishing at 8,182.88. The S&P 500 traded as high as 3,021.99 earlier Thursday — within striking distance of its all-time closing high of 3,025.86 set on July 26.
Friday is quadruple witching day for U.S. markets. That’s when the quarterly expiration of futures and options on indexes and stocks occurs on the same day, sometimes spurring volatility.
What’s driving the market?
A report on the U.S. housing market and manufacturing data in the Philadelphia area helped to hearten investors about the state of the U.S. economy on Thursday.
Existing-home sales rose 1.3% in August from the previous month to a seasonally adjusted annual rate of 5.49 million, the National Association of Realtors said, marking the strongest pace of sales since March of last year.
And the Philadelphia Federal Reserve’s manufacturing index fell to 12.0 in September after registering a reading of 16.8 in August, but was above forecasts for a reading of 10 by economists polled by MarketWatch. Any reading above zero indicates improving conditions.
“The majority of market participants are still digesting the Fed, and we saw a quick shift of the focus back to the trade war,” said Edward Moya, senior market analyst at OANDA. “Markets thought this was supposed to be an easy week for trade,” Moya told MarketWatch, but instead, the South China Morning Post reported that a senior White House official said tariffs on Chinese goods could go as high as 50$ or even 100%.
Randy Frederick, vice president for trading and derivatives at Schwab, also noted that markets were nearing all-time highs. “There’s probably a little bit of technical resistance,” he said. “I didn’t quite think we’d get here, short of some very positive developments in the trade discussions,” Frederick added.
The Fed cut interest rates by a quarter percentage point to a range of 1.75% to 2% Wednesday afternoon, as expected. However, three of the 10 members of the rate-setting Federal Open Market Committee dissented, marking the highest number of dissenters since 2016, and raising doubts that the FOMC would deliver further hoped-for cuts to benchmark rates this year or kick off a new round of bond buying.
“Bad news used to be good news,” because it meant the Fed would cut rates, but that’s shifted, Schwab’s Frederick told MarketWatch. “I don’t think people want rate cuts that much right now if they could have more trade certainty or better economic data.”
The Paris-based Organization for Economic Cooperation and Development, in a Thursday report underscored that intensifying tariff disputes have stalled economic growth world-wide.
“Escalating trade conflicts are taking an increasing toll on confidence and investment, adding to policy uncertainty, aggravating risks in financial markets and endangering already weak growth prospects world-wide,” the OECD forecasts said.
Meanwhile, the New York Federal Reserve held its third repurchase auction in as many days on Thursday, injecting a further $75 billion into the financial markets by buying securities from Wall Street dealers, an attempt to keep short-term rates from soaring due to a lack of liquidity
On the international trade front, Chinese and U.S. delegates are meeting Thursday and Friday ahead of higher-level meetings expected early October to resolve the yearlong trade dispute.
Elsewhere in economic reports, U.S. initial jobless claims rose 2,000 to 208,000 in the seven days ended Sept. 14, the government said Thursday. Claims fell a revised 13,000 to 206,000, a nearly five-month low, in the prior week.
Which stocks are in focus?
Microsoft Corp. shares MSFT, +1.84% climbed 1.9% on Thursday after the technology giant announced that its board approved a $40 billion share buyback and increased its dividend by 11%.
Datadog Inc. DDOG, +39.07% shares surged nearly 40% after making its trading debut. The cloud-monitoring company made received a buyout bid from Cisco Systems Inc. ahead of its initial public offering, according to reports.
Shares of software company Ping Identity Holding Corp. PING, +34.07% popped nearly one-third on Thursday after its initial public offering, giving the company a valuation of more than $1 billion.
Shares of McDermott International Inc. MDR, -26.85% slid 24% amid heavy trading, amid fears that the provider of engineering and construction services to the energy industry may be considering a bankruptcy after reports that it hired a turnaround consultant. The company denied that rumor.
How did other markets trade?
In commodities, oil futures rose on concerns that Saudi production will be slow to return after last Saturday’s attacks. On Monday, it posted the largest daily gain for the most-active contract since Sept. 22, 2008 and finished at its highest level since May, according to Dow Jones Market Data, but then retreated Tuesday and Wednesday to give back most of those gains.
Gold GCZ19, +0.31% fell, while the U.S. dollar, as measured by the ICE U.S. Dollar Index DXY, -0.03%, a gauge of the buck against a basket of leading rivals, receded by 0.2%.
Bond yields rose Thursday afternoon. The 10-year U.S. TMUBMUSD10Y, -0.67% note increased by one basis point, to 1.79%, while the 2-year TMUBMUSD02Y, -0.41% note were unchanged at 1.75%.