Asian markets were lower across the board, led by Hong Kong as protests continued there. U.S. equities looked set to follow the lead of Asian stocks ahead of the release of U.S. inflation data, but that abruptly changed after it was revealed that officials in China held a call with U.S. representatives today and will hold additional trade talks by phone with the U.S. in 2 weeks. At about the same time, the U.S. Trade Representative's office announced that new tariffs on some key consumer products made in China, including cell phones, will be pushed out to mid-December, cementing an up day for U.S. stocks.
ECONOMIC EVENTS: In the U.S., the Consumer Prices Index rose 0.3% month-over-month in July, with the core rate up 0.3% as well, both of which were a little hotter than expected. On a 12-month basis, headline consumer prices are up 1.8%, while core CPI rate excluding food and energy was up 2.2% year-over-year, showing a slight acceleration in inflation from the prior month.
The United States Trade Representative announced the next steps in the process of imposing an additional tariff of 10% on approximately $300B of Chinese imports, which will go into effect on September 1. Certain products are being removed from the tariff list based on "health, safety, national security and other factors" and will not face additional tariffs of 10%, the USTR said. Also, it was determined that the tariff should be delayed to December 15 for certain articles, including cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.
Meanwhile, police clashed with protesters during a second straight day in which pro-democracy demonstrators tied up Hong Kong's international airport. Later in the day, President Trump said China was moving troops to the city's border, urging everyone to "be calm and safe!"
TOP NEWS: Shares of Apple (AAPL) gained 4.2% after the USTR announced the delay of planned tariffs on items such as cell phones and laptop computers. Shares of electronics retailer Best Buy (BBY) also reacted favorably to the news, rising 6.5%.
Shares of Brinker (EAT) fell 3.1% after the owner of the Chili's and Maggiano's restaurant chains reported better than expected earnings and gave upbeat profit guidance for the upcoming fiscal year, but posted lower than expected quarterly sales.
In M&A news, CBS (CBS) and Viacom (VIAB) finally announced they have entered into a definitive agreement to combine in an all-stock merger, creating a company with over $28B in revenue. Under the terms of the transaction, each Viacom Class A voting share and Viacom Class B non-voting share will convert into 0.59625 of a Class A voting share and Class B non-voting share of CBS, respectively. The companies said that the combined entity will be named ViacomCBS at closing, which is expected to occur by the end of calendar year 2019. Existing CBS shareholders will own approximately 61% of the combined company and existing Viacom shareholders will own approximately 39% of the combined company on a fully diluted basis.
Meanwhile, the Federal Housing Finance Agency sent to the Federal Register for publication a final rule on the validation and approval of third-party credit score models that can be used by Fannie Mae (FNMA) and Freddie Mac (FMCC). The regulation requires a four-phase process for validation and approval of credit score models. Under the new rule, Fannie and Freddie will have to consider credit-score alternatives to Fair Isaac's (FICO) FICO score when determining a mortgage applicant's creditworthiness, Andrew Ackerman of the Wall Street Journal pointed out. Shares of Fair Isaac slipped 5.7% after the news.
MAJOR MOVERS: Among the noteworthy gainers was Deciphera (DCPH), which jumped almost 80% after reporting top-line data from its INVICTUS pivotal Phase 3 clinical study of ripretinib. Also higher was Genworth (GNW), which gained 15.8% after Brookfield Business Partners (BBU) announced an agreement to purchase Genworth's majority interest in Genworth MI Canada for approximately C$2.4B, or C$48.86 per share.
Among the notable losers was Covetrus (CVET), which dropped 40.1% after reporting quarterly results and providing sales guidance for fiscal 2019. Also lower after reporting quarterly results was Bloom Energy (BE), which fell 42.5%.
INDEXES: The Dow rose 372.54, or 1.44%, to 26,279.91, the Nasdaq gained 152.95, or 1.95%, to 8,016.36, and the S&P 500 advanced 42.57, or 1.48%, to 2,926.32.
