Morning Update: Stocks Continue Higher on Shutdown and Trade Optimism

First Look

Stocks continued Tuesday’s rally ahead of the bell Wednesday morning on optimism that a government shutdown can be averted and a trade deal can be reached with China. President Trump spoke at the White House yesterday, saying that he doesn’t expect or want a government shutdown. The President said he is disappointed with the funding deal reached in Congress. Trump said he plans to pursue construction of the border wall using methods other than, and in addition to, the $1.4 billion in the current deal, which is far less than the $5.7 billion Trump requested. Trump also said he wants to make a deal with China on trade. The President expects to meet with Chinese President Xi Jinping at some point, to finalize a deal. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are meeting with Chinese officials Thursday and Friday this week. The President said that if they are close to making a “real deal,” he would consider extending the March 1 deadline, but generally did not want to do so. Right now, there are 25% tariffs on $50 billion in Chinese goods and 10% duties on $200 billion of Chinese goods. If the deal cannot be reached, and the deadline is not extended, the 10% tariffs will be increased to 25%. Earnings season is also still underway, with Cisco Systems (CSCO), Coca-Cola (KO), and Nvidia (NVDA) all on-deck to report later today and tomorrow. The Nasdaq is up 0.4%, the Dow Jones is up 0.28%, the S&P 500 is up 0.23%.

Today's market outlook is Neutral

No man has a good enough memory to be a successful liar.
Abraham Lincoln

Stocks on the Move

Interpublic Group of Companies Inc (IPG), Hilton Hotels Corporation Common Stock (HLT) and Freeport-McMoRan Inc (FCX) are moving higher this morning, while DISH Network Corp (DISH), Tripadvisor Inc Common Stock (TRIP) and Mylan NV (MYL) are headed lower. Shopify Inc (SHOP), Bloom Energy Corp (BE) and Freeport-McMoRan Inc (FCX) were upgraded by analysts this morning, while Deere & Company (DE), Aquantia Corp (AQ) and First Data Corp (FDC) were downgraded.

International Markets

Stocks in Asia are mixed. The Shanghai SE Composite Index is up 1.84%, the Nikkei 225 is up 1.34%, the Hang Seng is up 1.15% the Australia ASX All Ordinaries is down -0.14% and the Mumbai Sensex is down -0.66%. In Europe stocks are up. The FTSE 100 is up 0.63%, the CAC 40 is up 0.39%, the Euro Stoxx 50 is up 0.34% and the DAX is up 0.28%.

Futures and Currencies

Energy futures are mixed today. The price for West Texas Intermediate crude oil is up 0.29 at 53.39 per barrel. Brent crude is up 0.53 at 62.95 per barrel. Natural Gas is down -0.09 at 2.6. Precious metals are down this morning. Gold is down -1.54 at 1309.26 per ounce. Platinum is down -3.08 at 788.54 while silver is down -0.04 at 15.65. The dollar is mixed compared to the major currencies today. The greenback is up against the euro, up against the Yen and down against the Pound.

Put/Call Ratio

Yesterday, 996,011 call contracts traded on the Chicago Board Options Exchange (CBOE) compared to 570,208 put contracts. The single-session put/call was 0.57 while the 20-day moving average is now at 0.62.

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Today's Economic Calendar

What's Happening Period Release Time
MBA Mortgage Applications Index 02/09 07:00
CPI Jan 08:30
EIA Crude Oil Inventories 02/09 10:30
Treasury Budget Dec 14:00

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