Yahoo Finance Stocks rally despite intensifying trade tensions, Tesla gets probed
The S&P 500 (^GSPC) closed up 0.54%, reflecting a 15.51 point increase at market close to 2904.31. The Dow Jones Industrial Average (^DJI) posted a 0.71% increase, and the tech stock-heavy NASDAQ Composite (^IXIC) climbed 0.76%.
Despite the rally in U.S. markets Tuesday, some experts think investors should stay be wary in the wake of the intensifying trade war between two of the world’s largest economies.
“A 5%+ type S&P 500 pullback is now more likely and we remain tactically cautious,” according to a note from investment bank UBS.
Beijing announced Tuesday its decision to tack on $60 billion of U.S. products to its list of import tariffs, a retaliation against the Trump administration’s earlier announcement to impose 10% tariffs on $200 billion worth of Chinese goods starting Sept. 24. The U.S. tariffs would increase to 25% in January if China refused to pull back on its own punitive measures. China’s counter-tariffs, whose targets include U.S. agricultural products and textiles, will take effect Sept. 24.
The tit-for-tat between the two countries could be decades away from resolution, said Jack Ma, founder and executive chairman of China-based e-commerce company Alibaba Group Holding Ltd., at an annual conference for investors.
“It’s going to last long, it’s going to be a mess,” Ma said, according to a report by CNN. He added the trade war could last “maybe 20 years.”
Meanwhile, media companies in China have remained largely silent about the ongoing trade war in light of government censorship.
Tesla faces Justice Department probe
The U.S. Justice Department is investigating the legality of public statements Tesla Inc (TSLA). Chief Executive Officer Elon Musk made about bringing his company private. The electric car-maker received a voluntary request for documents from the Justice Department but has not received a subpoena or request for testimony, according to reports from Bloomberg. Shares for Tesla closed down 3.35% percent at $284.96.
Musk had written in a Twitter post in early August that he intended to bring Tesla private at a price of $420 per share, with “funding secured,” a claim at the center of the Justice Department investigation into potential fraud.
Cannabis companies on the rise
Shares of British Columbia-based Tilray Inc. (TLRY) surged Tuesday after the U.S. Drug Enforcement Administration approved imports of medical cannabis for medical testing purposes. Tilray closed up 29% to $34.79.
Tilray’s Tuesday high comes following reports from Monday that Coca-Cola Co. (KO) is considering producing a line of non-psychoactive cannabidiol-infused beverages with Aurora Cannabis Inc.
Here are some major events coming up Wednesday:
The U.S. Department of Commerce will post its August housing starts report. Last month, the department announced that new construction for privately owned homes was at a modest increase of 0.9% for the month of July.
U.S. software company Red Hat Inc. (RHT) will report earnings after market close Wednesday, with anticipated earnings per share of 82 cents on revenues of $828 million, according to the average of analyst estimates compiled by Bloomberg.
Herman Miller Inc. (MLHR) will also report earnings after the bell Wednesday. The furniture company is expected to see earnings of 65 cents per share on revenues of $623 million, according to Bloomberg’s average analyst estimates.
