Wall Street’s main domestic equity indexes ended regular trading higher after a choppy session on Thursday as optimism grew with respect to trade after reports that the White House is considering a delay in imposing tariffs on Mexican imports. It was the first time since mid-May that the three major indexes gained ground for three sessions in a row.
The market added to gains after a Bloomberg report cited unidentified sources saying that Trump could delay the tariffs he had threatened to put on Mexican goods as soon as Monday.
The Washington Post reported that under a possible immigration deal, Mexico would deploy 6,000 troops to the Guatemalan border. However, caution is the word of the day until a final U.S.-Mexico deal is reached and followed by a U.S.-China trade deal.
It appears now that the White House will decide more on the tariff issues after the G20” meeting later this month.
The energy sector, which was the hardest-hit last month by heightening trade tensions, rose 1.7% as crude prices made some gains late in the day, making it the largest percentage gainer of the S&P’s 11 major sectors. [O/R]
The trade-sensitive industrial sector regained some ground late in the session and ended the day up 0.01% after falling as much as 0.86% earlier.
While investors are hopeful that the Fed might be open to cutting interest rates if needed, they were cautious before the jobs report due on Friday morning after private data was weaker than expected on Wednesday.
Federal Reserve policymakers have hinted they would be ready to cut rates if the U.S.-China trade spat threatens a decade-long expansion. Since early May, Trump has slapped tariffs on Chinese imports and warned of levies on Mexico.
Earlier in the day, the European Central Bank also underscored the threat to global economic expansion from the trade disputes by trimming the region’s growth forecasts for the next two years.
Approximately 6.72 billion shares changed hands on the major domestic equity exchanges on Thursday, as compared to a 7.12 billion share average over the past 20 trading days.
Unemployment Claims Unchanged
The number of Americans filing applications for unemployment benefits was unchanged last week, suggesting the labor market remains on solid footing despite slowing economic activity.
Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 218,000 for the week ended June 1, the Labor Department said on Thursday. Data for the prior week was revised to show 3,000 more applications received than previously reported. The Labor Department said no states were estimated.
The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,500 to 215,000 last week.
The claims data has no bearing on May’s employment report, which is scheduled for release on Friday.
Sustained labor market strength is seen supporting growth amid signs that economic activity is slowing after a temporary boost from volatile exports and inventory accumulation in the first quarter. Manufacturing production and home sales slumped in April, and consumer spending increased moderately.
Thursday’s claims report also showed the number of people receiving benefits after an initial week of aid rose 20,000 to 1.68 million for the week ended May 25. The four-week moving average of the so-called continuing claims slipped 1,000 to 1.67 million.