Trade Headlines Aren’t What They Used to Be

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A Tweet from President Trump this morning helped the major indices overcome a negative open and post solid gains by midday.

But it didn’t last!

Stocks turned sharply lower late in the session with the only positive result coming from the Dow’s paltry 0.01% advance to 25,967.33. That’s a gain of a little over 2 points after losing more than 500 in the previous two days. Hey, we’ll take whatever we can get!

The NASDAQ had the worst performance with a slip of 0.26% (or about 20 points) to 7943.32, while the S&P dipped 0.16% to 2879.42.

Three days after threatening to raise tariffs on Chinese goods, President Trump delivered another market-moving Tweet stating that the Chinese delegation are “coming to the U.S. to make a deal.” Stocks jumped on the news.

However, we’ve seen this before. Many times. An optimistic statement, news story or Tweet sends stocks soaring in hopes that a trade deal is right around the corner.

Well, we’re still waiting!

And now we’ve seemingly lost control of the game in the 9th inning with China reportedly walking back most of the concessions made over the past several months of discussions.

So a headline just isn’t going to work anymore.

The editors aren’t making many moves right now because – along with tons of other investors – they’re waiting to see what becomes of this latest bit of drama in the trade story. Chinese officials are on their way to Washington for yet another round of talks this week.

We may get some clarity as early as Friday, which is when the President threatened to raise tariffs on $250 billion worth of Chinese goods to 25% from 10%. China subsequently stated that they would be forced into taking countermeasures.

Doesn’t it feel like we’ve been here before?

Unfortunately, hopes for a trade deal coming in the next few weeks have been dashed, which is all the more frustrating because the market had been thinking that a resolution was close for the past several months.

Maybe we’ll get another stay of execution like last time. Or maybe the President makes good on his threat and we get another round of tariffs between the two countries.

Either way, we’re moving toward a very eventful end to this week.

Today's Portfolio Highlights: 

Surprise Trader: Don’t let all this recent trade drama distract you from the remaining reports of this earnings season. On Wednesday, Dave added  Zacks Rank #2 (Buy) solar company SunPower (SPWR). It has a noteworthy Earnings ESP of 22.5% for the report coming tomorrow after the bell. The stock is also part of a space in the top 9% of the Zacks Industry Rank. The editor put the portfolio’s remaining cash into SPWR after selling Cactus (WHD). Read the full write-up for more.

Home Run Investor: While the portfolio didn't have a new buy on Wednesday, it did have the best performer among all ZU names. Astronics Corp. (ATRO) soared 16.2% today after reporting its fourth straight quarter with a positive earnings surprise. It also beat on the top line. "That was good to see with a healthy book to bill and a lot of backlog coming later this year," said Brian Bolan. The stock is now up more than 18% in the portfolio since being added in late March.

All the Best,
Jim Giaquinto

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