Wall Street dips from record in ‘Jason Bourne market’

Wall Street dips from record in ‘Jason Bourne market’

(Reuters) – U.S. stocks hit intra-day record highs on Tuesday before turning negative following a report that the United States would likely maintain tariffs on Chinese goods until after November’s presidential election.

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., January 13, 2020. REUTERS/Brendan McDermid

The eventual removal of tariffs by Washington would depend on Beijing’s compliance with the Phase 1 trade accord, which is expected to be signed on Wednesday, Bloomberg reported, citing sources.

With the S&P 500 at record levels, equivalent to around 18 times expected earnings, algorithmic traders and human investors immediately interpreted the Bloomberg report as a reason to sell, said Joe Saluzzi, co-manager of Themis Trading, in Chatham, New Jersey.

“We’re in a Jason Bourne market. The first thing Jason Bourne does when he walks into a room is look for the exit, just in case,” Saluzzi said, comparing investor sentiment to the fictional action character.

The Dow Jones Industrial Average, S&P 500 and Nasdaq each touched intra-day record highs before losing ground in afternoon trade.

Wall Street has surged in recent weeks, fueled by optimism that a truce in U.S. President Trump’s trade war with China would boost corporate earnings.

China has pledged to buy nearly an additional $80 billion of manufactured goods from the United States over the next two years, and over $50 billion more in energy supplies, Reuters reported, citing a source briefed on the Phase 1 trade deal.

Kicking off the fourth-quarter earnings season, JPMorgan Chase & Co (JPM.N), rose 1.4% after reporting a better-than-expected profit on strength in its trading and underwriting businesses.

Wells Fargo & Co (WFC.N) tumbled 4.9% after reporting a slump in profit as it set aside $1.5 billion for legal expenses. Citigroup Inc (C.N) rose 2.1% as it topped Wall Street profit estimates.

The S&P 500 banks index .SPXBK was up 0.3%.

“It (bank earnings) is reflective of where we are in the economic cycle,” said Mike Loewengart, vice president of investment strategy at E*TRADE Financial Corp.

“We’re coming off a decade of consistent gains and banks, especially JPMorgan producing record earnings, it’s not surprising given the strength of the U.S. economy.”

Analysts expect profits at S&P 500 companies to drop 0.5% for the second consecutive quarter, according to Refinitiv IBES data, largely due to a drag in energy and industrial earnings that have been hit by a prolonged Sino-U.S. trade war.

At 2:24 p.m. ET, the Dow Jones Industrial Average .DJI was up 0.08% at 28,931.05 points, while the S&P 500 .SPX lost 0.18% to 3,282.23.

The Nasdaq Composite .IXIC dropped 0.22% to 9,253.13.

Delta Air Lines Inc (DAL.N) rose 3.3% after better-than-expected quarterly profit, boosted by customers gained from rival airlines’ 737 MAX cancellations. The S&P 1500 airlines index .SPCOMAIR rose 1.5%.

Advancing issues outnumbered declining ones on the NYSE by a 1.17-to-1 ratio; on Nasdaq, a 1.18-to-1 ratio favored advancers.

The S&P 500 posted 59 new 52-week highs and no new lows; the Nasdaq Composite recorded 156 new highs and 24 new lows.

Reporting by Noel Randewich in San Francisco, additional reporting by Sruthi Shankar in Bengaluru; Editing by Nick Zieminski

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