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Stock market news: November 18, 2019

Each of the three major domestic stock indices posted fresh closing highs at the end of Monday’s session, shrugging off some earlier choppiness as investors considered mixed signals over progress in a U.S.-China interim trade agreement.

In the 30-stock Dow, Disney (DIS) and UnitedHealth (UNH) outperformed.

Here’s where the markets settled Monday at the end of regular equity trading:

  • S&P 500 (^GSPC): +0.05%, or 1.55 points

  • Dow (^DJI): +0.11%, or 31.26 points

  • Nasdaq (^IXIC): +0.11%, or 9.11 points

  • 10-year Treasury yield (^TNX): -2 bps to 1.814%

  • Gold (GC=F): +0.25% to $1,472.10 per ounce

U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer spoke over the weekend with Chinese Vice Premier Liu He to work out details of a phase one trade agreement between the two countries, according to the Chinese state-run news agency Xinhua.

The two sides had “constructive discussions on each other’s core concerns in the ‘phase one’ deal, and agreed to maintain close communication,” according to the account.

The Chinese account of the talks helped send futures initially higher. However, later in the overnight session, futures pared gains after CNBC reported Beijing was “pessimistic” that a phase one deal would get done given President Donald Trump’s reluctance to roll back existing tariffs on Chinese imports, according to a report citing an unnamed government source.

Separately, on Monday, the Trump administration decided to issue a 90-day extension to allow U.S. companies to continue doing business with Chinese telecoms giant Huawei. The company had been added to the Commerce Department’s economic blacklist in May on national security concerns, but had been allowed to purchase components from some U.S. companies to mitigate disruptions to these domestic firms.

Meanwhile, a surprise cut to short-term funding rates in China helped buoy risk assets as investors considered the fresh stimulus injected into the world’s second largest economy to help shore up growth by encouraging borrowing and lending.

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Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., November 4, 2019. REUTERS/Brendan McDermid

The People’s Bank of China reduced its key seven-day reverse repurchase rate to 2.50% from 2.55% previously, marking the first cut to the closely watched borrowing rate in four years. The move comes as China’s grapples with a growth rate stalling to a 30-year low, with trade concerns and cooling investment in the country weighing on economic expansion.

“For markets, this cut is as much about proving that the PBOC remains accommodative, with further easing likely in the event of continued weak growth,” Joshua Mahony, senior market analyst at IG Group, wrote in an email.

STOCKS: Saudi Aramco IPO, HP rejects Xerox takeover bid

Oil monolith Saudi Aramco is poised to be valued at between $1.6 trillion to $1.7 trillion after its initial public offering, based on details of the offering in a company statement over the weekend.

Saudi Aramco, the world’s most profitable company, intends to price its offering between 30-32 Saudi riyals and sell a 1.5% stake in the company, or around 3 billion shares. The listing is set to take place in December on the Taduwal stock exchange, and Saudi Aramco has said that it would sell up to 0.5% of its shares to individual investors.

HP (HPQ) rejected a proposed takeover bid by printing hardware company Xerox (XRX), writing in an open letter over the weekend that the latter’s $33.5 billion cash-and-stock offer “significantly” valued the company. HP’s market valuation is more than three times that of Xerox, and HP’s board said it a combined company would be left with “outsized debt” and would not be in the “best interests” of shareholders.

In the letter, however, HP suggested it would consider a transaction that would involve it being the acquirer of Xerox, noting that it could “quickly evaluate the merits of a potential transaction.”

T-Mobile (TMUS) announced Monday that Mike Sievert, currently chief operating officer, will take over as chief executive officer on May 1, 2020, the company said in a statement. Sievert is set to replace John Legere, whose contract with the telecoms company ends April 30, 2020.