Stocks rebounded from yesterday’s trade related selloff and the Dow closed up 30 points on light volume at 24,283. Energy stocks and techs led the way.
The Chinese stock market entered bear territory and is now down 20% so far this year thanks to the trade negotiations. China is transitioning to a consumer-based economy from an export driven economy but is vulnerable to an economic downturn because of overcapacity in steel and other industries besides pollution problems and coupled with massive debt levels held in off balance sheet entities by local cities and jurisdictions. Some estimates note that this debt problem is roughly $2 trillion in value. Xi has his work cut out for him.
Oil prices shot higher with WTI crude trading up over 3% as the price of crude crested $70 per barrel. The reason behind the surge was a directive from the US State Department telling importers they, by November of this year, can no longer buy or import crude oil from Iran. Inside Iran meanwhile tensions are on the rise as thousands protested yesterday in Tehran over gubment policy that sends money to proxys fighting in Syria, Yemen and Gaza while ignoring the domestic economy. Unemployment is at 24% and the rial (Iran’s currency) is falling like a rock against the US dollar.
Shares of GE moved higher today after the company announced it was selling both its medical services division and its Baker Hughes oil well services unit. CEO John “Yard Sale” Flannery said that with these moves the asset sales are officially over and that he was also out of those little orange price sticker tags made by 3M. He also noted that the dividend will most likely be “adjusted” once the medical division deal is closed. Going forward, the incredibly shrinking GE will focus on renewable energy, power and aviation.