After being closed yesterday in honor of the late great President George H. W. Bush, stocks opened to the downside on Thursday but found support at 24,200 and rallied into close with a 79 point loss at 24,974. Trading volume was high. The NASDAQ closed higher for the day thanks to a rebound in tech stocks. Today’s reversal was constructive as it was the third test of support in the past two months.
The stock selloff started when Sabrina Meng Wanzhou, CFO of Chinese telecom giant Huawei, was detained in Vancouver, BC over Huawei’s possible violation of US trade sanctions against Iran. The action raised concerns that trade negotiations between the US and China could be derailed. A hearing is set for Friday to determine if Sabrina will face charges in the Eastern District of New York.
In economic news, the November ISM-non-manufacturing business survey registered a reading of 60.7 up 0.4 from October and coming in better than expected. This report shows that the service sector in the US has now been in growth mode for 106 consecutive months. The report showed the service sector of the US economy growing faster than expected and while respondents remain positive about current business conditions and the direction of the economy, they were concerned about labor shortages and the impact of tariffs.
Shares of Spokane, WA based utility Avista fell hard after a Washington State regulator nixed the merger with Ontario based Hydro One. WUTC regulators said the deal is not good for customers and investors. Washington’s utility regulators noted troubling signs of political influence from the Province of Ontario over how the merged company would be managed. Ontario owns 47% of Hydro One and had promised to be a passive investor but after a recent election, the new political leadership in Ontario met with Hydro One and made some sort of agreement that resulted in the board and CEO of Hydro One being booted out. Washington regulators looked at this and saw it as a deal killer since Avista/Hydro One customers in Spokane, North Idaho and Pullman might now be at the whim of Canadian politicians. Beauty eh?