U.S. Stock Market Mostly Higher as China Set to Unveil New Trade-Deal Proposal
The Dow and broader U.S. stock market diverged Thursday amid news that Chinese President Xi Jinping will offer President Trump new terms to resolve the long standing trade dispute. Both leaders are expected to meet in person Saturday following the Group of 20 summit in Osaka, Japan.
Dow Backtracks; S&P 500 Snaps Four-Day Skid
Wall Street’s major indexes diverged on Thursday, with the Dow Jones Industrial Average erasing gains in the final hour of trading. The blue-chip index settled down 10.24 points, or 0.04%, at 26,526.58.
The broad S&P 500 Index of large-cap stocks climbed 0.4% to 2,924.92, its first positive session in five days. Ten of 11 primary sectors reported gains, led by financials. Health care also outperformed the broader market.
The Nasdaq Composite Index, which is often viewed as a proxy for tech stocks, jumped 0.7% to 7,967.76.
China to Propose New Trade Deal Terms
China is prepared to settle its nearly yearlong trade dispute with the United States provided certain conditions are met. As The Wall Street Journal reported Thursday, Chinese President Xi Jinping plans to present those terms to President Trump on Saturday.
To agree on a trade deal, China will demand that the United States lift a blanket ban on the sale of technology to Huawei and remove all tariffs on Chinese imports. China will also call on the U.S. to stop demanding that it buys more American-made goods.
Some of the terms are a complete reversal from what China was prepared to do earlier this year. As CCN reported back in January, China had offered a $1 trillion buying spree over six years to completely eliminate its surplus with the United States.
Xi isn’t expected to take a confrontational tone when he meets President Trump over the weekend, but will instead present his vision for a positive bilateral trading relationship. Earlier this week, U.S. Treasury Secretary Steven Mnuchin said both countries were about “90% of the way” to a new trade agreement.
Bitcoin’s 20% Correction
The value of bitcoin pulled back sharply on Thursday, as the leading digital currency shed nearly 20% over the 24 hour trading cycle. At the time of writing, bitcoin’s average price was $10,895, according to CoinMarketCap. It peaked near $13,900 earlier this week.
Bitcoin’s sharp reversal was expected following a 50% surge over the previous seven days. The rally pushed bitcoin’s relative strength index to around 90, an indication of extreme overbought levels.
Altcoins and tokens suffered an equally punishing reversal, with all of the top-20 coins excluding Tether (USDT) plunging double digits.
Even with the major retracement, bitcoin is still up by around a third for the month of June and is on track to extend its winning streak to five months. Read more here.
Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock. Charts via Stockcharts.com and CoinMarketCap.