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Stocks edge higher; Dow lifted by upbeat earnings from Cisco Walmart – MarketWatch

11 min read

U.S. stocks traded modestly higher Thursday morning, with the Dow getting a lift after upbeat earnings from two components, while investors weighed the latest developments on the trade front after U.S. President Donald Trump appeared to target China telecommunications group Huawei Technologies Co. with an emergency declaration against threats to U.S. technology.

Meanwhile, economic data on the U.S. labor and housing markets came in better than expected, potentially offsetting worries over trade.

How are major indexes faring?

The Dow Jones Industrial Average

DJIA, +0.93%

 rose 94 points, or 0.4%, at 25,766, while the S&P 500 index

SPX, +1.18%

 rose 9 points, or 0.3%, to 2,864. The Nasdaq Composite Index

COMP, +1.27%

 rose 7 points, or 0.1%, to 7,538.25.

On Wednesday, the Dow Jones Industrial Average rose 115.97 points, or 0.5%, to 25,648.02 and the S&P 500 index 0.6% to 2,850.96. The tech-heavy Nasdaq Composite Index outperformed its peers 1.1%, to 7,822.15.

Read: The woman who nailed the 2018 stock-market volatility blowup has kicked off an actively managed ETF

What drove the market?

The Trump administration fired a fresh salvo in a trade spat with China late Wednesday, issuing an executive order that bans telecom equipment from countries considered “foreign adversaries”. The move appeared to target Huawei, which has been under pressure from the White House for months.

Additionally, the Commerce Department said Wednesday evening that it would add Huawei to a list of entities that engage in “activities contrary to U.S. national security and/or foreign policy interests,” a move that could greatly restrict its purchases of American-made chips, which it relies on for many of its products.

A spokesman for China’s Commerce Ministry said the country opposes other countries imposing unilateral sanctions on Chinese entities and that Washington should avoid further affecting Sino-U.S. relations, Reuters reported. The spokesman also said he had no information on plans for a U.S. trade delegation to visit China, the report said.

The tussle comes against the backdrop of trade tensions between the U.S. and China that have triggered volatility across global equity markets. Huawei responded to CNBC that such a move will only put the U.S. behind when it comes to 5G development, given the Chinese tech giant is the “unparalleled leader” in the field, it said.

The executive order came after markets Wednesday received a lift from reports that Trump would delay a decision on instituting new tariffs on car and auto part imports for up to six months. Hours earlier, Treasury Secretary Steven Mnuchin said the U.S. would “most likely” meet with Chinese delegates again in Beijing after each side fired off trade tariffs at the other.

Some budding optimism over trade relations between the two countries has offered some reprieve to investors this week, with the S&P 500 now higher for two-straight sessions after last week’s sharp losses.

Read: Can the stock market hold out long enough for Trump to win a trade war?

What’s economic data are in focus?

The number of Americans applying for jobless benefits fell by 16,000 in the week ended May 11, to 212,000, the Labor Department said Thursday. That’s below the 217,000 expected by economists polled by MarketWatch.

Construction of new homes rose 6% in April from the month earlier the Commerce Department said Thursday, to an annual rate of 1.24 million, above the 1.21 million pace expected by economists, per a MarketWatch poll.

The Philadelphia Fed’s manufacturing index rose to a four-month high in May, reaching 16.6, after registering 8.5 in April.

What are analysts saying?

“It’s hard to keep up with the Trump White House at the moment. After the damaging trade war escalation that dominated either side of the weekend, the markets were granted a reprieve on Wednesday as reports came out suggesting the US was prepared to delay tariffs on cars from Europe and Japan,” wrote Connor Campbell, financial analyst at SpreadEx.

“And then the president zigged when it looked like he was zagging, declaring a national emergency to protect US computer networks from ‘foreign adversaries’ – i.e. a big middle finger to China via an attack on Huawei. The latter, alongside 70 of its affiliates, is now on the Entity List, meaning it will require official US government approval to buy crucial parts and components from American companies.”

Which stocks are in focus?

Dow Component Walmart Inc.

WMT, +3.58%

shares rose 1.2% before the bell Wednesday, after the retailer reported better-than-expected earnings for the first quarter, though revenue fell short of analyst forecasts. U.S. same-store sales rose 3.4%, beating an expected 3.2% increase, according to FactSet.

Shares of fellow Dow constituent Cisco Systems Inc.

CSCO, +5.80%

 rose more than 3% in premarket trade after the networking- and telecom-equipment company reported quarterly results late Wednesday that topped Wall Street forecasts and delivered an upbeat revenue forecast.

Dillard’s Inc.

DDS, -10.90%

stock fell 8.8% Thursday morning, following a Wednesday-evening earnings release that showed the department store chain missing revenue projections for the first-quarter, while same-store sales were flat.

Read: How Cisco is working around the China tariffs

How are other markets trading?

Asian markets had a mixed session, with a 1.2% drop for Korea’s Kospi

SEU, -1.20%

 and a 0.6% gain for the Shanghai Composite

SHCOMP, +0.58%

In Europe, stocks were modestly higher, with the Stoxx Europe 600

SXXP, +0.78%

rising 0.4%

Crude oil

CLM9, +1.74%

prices advanced, while gold

GCM9, -0.55%

was softer. The U.S. dollar

DXY, +0.25%

meanwhile, was edged higher.

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