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What’s moving markets today: December 18, 2019
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The Trump economy is good for his reelection. Will trade stand in the way?
2:50
• Source:
CNN
8 Posts
Stocks snap record streak
US stocks finished mixed on Wednesday, breaking a two-day run of record closing highs.
Stocks were pushed higher by continued optimism over a potential trade deal between the United States and China at the start of the week.
- The Dow closed 0.1%, or 28 points, lower, while the S&P 500 finished little changed in negative territory
- The Nasdaq Composite closed up 0.1% at its third straight record high this week.
Telsa (TSLA) hit an all-time high of above $395 per share during the trading day.
A big risk for your 2020 investments: The Fed
The Federal Reserve’s loose monetary policy helped stocks move higher in 2019, but it’s leaving investors facing certain risks for next year.
Equity investors are too concentrated in popular areas of the market, said Phil Bak, CEO of Exponential ETFs, on the CNN Business’ digital live show Markets Now. On top of that, corporate debt is on the rise globally.
“So much investing is done based on the market cap. Well, what happens if there’s an unwinding?” said Bak.
A lot of strategies are based on where the CBOE’s volatility index is today, but the VIX is near all-time lows, Bak said. This could be another big risk for investors in case volatility spikes.
Trade worries are standing between the market and another rally
Trade has been the biggest driver of the stock market in 2019, and going into the new year, the dynamic still looks similar.
“The market doesn’t like any of these trade tariffs,” Jeremy Siegel, finance professor at the Wharton School of the University of Pennsylvania, told Eleni Giokos on CNN Business’ digital live show Markets Now.
But if the United States and China sign a deal, there could be another 10% jump in the market, Siegel said.
On the other hand, “if it does blow up and Trump rethreatens tariffs, there could be a big selloff,” Siegel said, adding that he didn’t expect this scenario to pan out.
Ahead of the 2020 election, President Donald Trump, who has repeatedly taken credit for the strong stock market performance this year, cannot “tollerate” the market turning south, Siegel said.
Stocks inch higher
US stocks opened modestly higher on Wednesday, on track for yet another day of record highs. The three major indexes hit fresh all-time highs for two days in a row this week.
Despite the record levels, the market feels lackluster on Wednesday, ahead of the House of Representatives’ vote on the impeachment of President Donald Trump.
- The Dow rose 0.1%, or 28 points.
- The S&P 500 also opened 0.1% higher.
- The Nasdaq Composite climbed 0.2%.
Why investors aren't paying attention to impeachment
It’s a big day in American politics. All signs indicate that the Democrat-led House of Representatives will impeach US President Donald Trump, charging him with abusing his power and obstructing Congress.
US politicos will be watching closely. Investors? Perhaps not. That’s because the market expectation is that Trump will be impeached by the House of Representatives but won’t be removed from office by the Senate.
Instead, investors are looking ahead to the second half of 2020, when the US presidential election could be a source of volatility.
FedEx's CFO said its profit was 'horrific.' The stock is now dropping
FedEx has been trying to turn its business around after a difficult year, but its second quarter results show that it’s not nearly there yet.
On Tuesday, the company reported net income of $660 million for the three months ending November 30, down nearly 40% from the same period a year earlier. Revenue fell to $17.3 billion from $17.8 billion over that time.
Shares in FedEx (FDX) dropped more than 7% in premarket trading Wednesday following the earnings release.
Fiat Chrysler and Peugeot owner agree deal to create world's third largest automaker
Fiat Chrysler (FCAU) and Peugeot owner PSA Group (PUGOY) have signed a binding merger agreement, solidifying a nearly $50 billion deal that will create the world’s third largest automaker.
The companies said in a joint statement Wednesday that they expect the 50-50 merger to be completed within 12 to 15 months, pending approval from shareholders and regulators.
The deal, which was first announced in October, should help spread the huge cost of developing electric and autonomous vehicles and help the mid-sized carmaker compete with larger rivals. The combined company would have roughly 410,000 employees and annual revenues of $190 billion.
Cathay Pacific will cut capacity next year as Hong Kong protests continue
Shares of Cathay Pacific (CPCAY) closed slightly lower in Hong Kong on Wednesday after the city’s flagship airline recorded yet another dismal month and said it would reduce capacity next year.
The company is still trying to overcome months of protests in the Asian financial hub, which have deterred tourists and weighed heavily on the airline industry and other sectors.
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