U.S. Stocks Bounce Off Lows in Anticipation of Trump-Kim Joint Agreement
The Dow and S&P 500 declined on Wednesday but finished well off session lows, as investors looked ahead to a “joint agreement signing ceremony” between President Donald Trump and North Korea’s Kim Jong Un.
Stocks Bounce – But Not High Enough
Stocks got off to a bad start on Wednesday, with the Dow Jones Industrial Average dropping as much as 180 points. It would later pare losses to settle down 72.82 points, or 0.3%, at 25,985.16.
The broad S&P 500 Index fell 0.1% to close at 2,792.38. Shares of materials, health care and communications companies were among the biggest decliners.
The technology-focused Nasdaq Composite Index closed at 7,554.51, having gained 0.1%.
Wall Street may struggle to extend its recent string of gains as the S&P 500 Index struggles to overcome strong resistance at 2,800. Read more: Does this Chart Spell Doom for the S&P 500 Index?
U.S.-North Korea Joint Agreement Imminent
U.S. President Donald Trump and North Korean leader Kim John Un will participate in a “joint agreement signing ceremony” in Vietnam this week, the White House has confirmed. The ceremony will take place Thursday in Hanoi, Vietnam and will likely center on recent dialogue over denuclearization.
“Kim Jong Un and I will try very hard to work something out on Denuclearization & then making North Korea an Economic Powerhouse,” Trump tweeted on Wednesday. He added that China, Japan and Russia will be “very helpful” in making that happen.
All false reporting (guessing) on my intentions with respect to North Korea. Kim Jong Un and I will try very hard to work something out on Denuclearization & then making North Korea an Economic Powerhouse. I believe that China, Russia, Japan & South Korea will be very helpful!
— Donald J. Trump (@realDonaldTrump) February 27, 2019
Trump and Kim signed a joint agreement at last year’s summit that sought to “establish new U.S.-DPRK relations in accordance with the desire of the peoples of the two countries for peace and prosperity.” One of the key elements of the agreement was complete denuclearization of the Korean peninsula.
Oil Gets a Liftoff
Crude prices surged on Wednesday after U.S. government data showed an unexpected plunge in commercial inventories last week. Commercial crude stockpiles fell by 8.647 million barrels per day in the week ended February 22, the U.S. Energy and Information Administration (EIA) reported. Analysts had called for an inventory build up of more than 3 million barrels.
U.S. West Texas Intermediate (WTI) futures peaked at $57.39 a barrel, the highest in three-and-a-half months. Read more: Oil Prices Hit Three-Month Highs as U.S. Crude Inventories Plunge.
Prices were also bolstered by Saudi Arabia’s commitment to extent its supply cuts well beyond June, as the cartel and its allies seek to re-balance an oversupplied market. Saudi Energy Minister Khalid al-Falih said the producer group will be careful not to cut back too much as the market returns to equilibrium.
President Trump has criticized the Saudi-led Organization of the Petroleum Exporting Countries (OPEC) for manipulating crude prices. On Monday, he tweeted the following: “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!”
Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike – fragile!
— Donald J. Trump (@realDonaldTrump) February 25, 2019
Featured image courtesy of Shutterstock. Chart via Stockcharts.com.