Stocks were whipsawed in morning trading amid conflicting reports about the status of trade negotiations between the U.S. and China. Chinese trade ministers held a press conference to give their take on the nature of the deal agreement that has been reached, after which President Donald Trump made his own announcement, sharing some of the trade deal details on Twitter. Despite further clarification from the office of the U.S. Trade Representative, many questions remain, which is keeping a lid on the market's gains. The China and U.S. trade deal confusion has been stealing the spotlight, at least here in the U.S., from the overwhelming victory of Prime Minister Boris Johnson and his Conservative Party in the U.K.
ECONOMIC EVENTS: In the U.S., retail sales increased 0.2% in November, and were up 0.1% excluding autos, which was a little disappointing compared to forecasts. Import prices increased 0.2%, with export prices up 0.2% in November. Business inventories rebounded 0.2% in October, while sales declined 0.1%.
On the trade front, President Trump tweeted that the U.S. has agreed to "a very large Phase One Deal with China." His tweets went on to say that the "penalty tariffs" set for December 15 will not be charged and negotiations on the "Phase Two Deal" will begin immediately, "rather than waiting until after the 2020 Election." United States Trade Representative Robert Lighthizer called the trade deal "historic and enforceable" in his own announcement on the agreement. The deal requires structural reforms and other changes to China's economic and trade regime in the areas of intellectual property, technology transfer, agriculture, financial services, and currency and foreign exchange and also includes a commitment by China that it will make "substantial additional purchases" of U.S. goods and services in the coming years. In exchange, the United States has agreed to modify its Section 301 tariff actions "in a significant way," explained Lighthizer. The U.S. will be maintaining 25% tariffs on approximately $250B of Chinese imports, along with 7.5% tariffs on approximately $120B of Chinese imports.
In Europe, U.K. Conservatives won an overall majority with 641 seats, up 47 from the last election, giving Prime Minister Boris Johnson a sufficiently strong majority to get the Brexit withdrawal agreement bill through parliament and lead the U.K. out of the EU. Additionally, Johnson pledged that the transition period, during which both sides will try to reach an agreement on the future trading relationship, will last no longer than a year and end in December 2020.
TOP NEWS: Oracle (ORCL) shares were 3% lower after the company reported mixed results for the second quarter and provided guidance for the third quarter. Of note, chief technology officer Larry Ellison said on the company's quarterly conference call that the company has no plans to hire a second CEO to join Safra Catz following the death of co-CEO Mark Hurd.
In other earnings news, Adobe (ADBE) shares rose 5% after the company reported better than expected fourth quarter results and provided guidance for the first quarter and fiscal 2020. Of note, CEO Shantanu Narayen said on CNBC's Mad Money after the report that the company is not overly concerned with the United States' current trade dispute with China.
Meanwhile, shares of several British banks, including Royal Bank of Scotland (RBS), Barclays (BCS), and Lloyds Banking (LYG), were all trading higher near noon as the U.K.'s Conservative party won the election over the Labour party, with Prime Minister Boris Johnson saying the victory gives him "a powerful new mandate to get Brexit done." Near midday, Royal Bank of Scotland trading in New York were up 9%, Barclays was 7% higher, and Lloyds had risen about 6.5%.
MAJOR MOVERS: Among the noteworthy gainers was Sarepta Therapeutics (SRPT), which surged 37% after the company said the Food and Drug Administration approved Vyondys53 injection for Duchenne muscular dystrophy patients amenable to exon 53 skipping. Also higher was Datadog (DDOG), which rose 7% after it announced a new integration with Microsoft (MSFT) Azure DevOps.
Among the notable losers was Athenex (ATNX), which slid 12% after it announced results from its Phase 3 trial of oral paclitaxel. Also lower were Broadcom (AVGO) and Costco (COST), which fell a respective 5% and 2% after reporting quarterly results.
INDEXES: Near midday, the Dow was down 27.78, or 0.10%, to 28,104.27, the Nasdaq was up 9.27, or 0.11%, to 8,726.59, and the S&P 500 was down 3.35, or 0.11%, to 3,165.22.
