Stocks rallied on low volume as the trade war between China and the US ebbs and flows. At the close the Dow gained 197 points at 25,877. IBD is still showing “market in correction” while BTS has recently moved to cash indicating a more risk off approach. The general tone of the markets is one of caution although that could change depending on how the trade talks go.
Trade issues continue to rule the roost and today the White House back off of a hard approach and allowed some chip companies to apply for a 90-day waiver as they start to move away from supplying Huawei with chips and other products. The news sent chip stocks higher and boosted the overall tech sector. This will be interesting to see how this plays out. China’s gubment wants to protect Huawei but it seems everyone else is growing weary of Huawei’s link with the Chinese communist party, its tactics and its desire to become the dominant global player by whatever means necessary. Nokia was run out of China years ago by Huawei even after winning a court fight over technology theft. Canada’s once mighty Nortel was also put out of business by Huawei using similar tactics. One source on a website called Chinapower said that Huawei underbids on jobs but then makes up for it with subsidies from the government.
Home Depot reported earnings results this morning and shares moved higher as the overall tone of the report was positive. Revenue gained 6% which bested estimates while net income grew 6% also above estimates. Same store sales figures were a bit disappointing and only gained 2.5%. Margins were steady and online sales grew over 21% as the company continues to roll out its same day “click & brick” service. On a note of interest, Home Depot said that lumber prices this quarter were about 50% lower than they were a year ago after lumber prices hit an all-time high in June 2018 thanks to demand, production bottlenecks and log supply issues.