Stocks remain under pressure but the trading trend for each day this week appears to be an early selloff followed by an afternoon rally and today was no exception. The Dow opened 300 points lower but closed the day up 114 at 25,942. Trading volume was low at the open but toward the close volume picked up and was higher for the day. For the week, the Dow was off 2.2%. IBD still has stocks under pressure while the good folks at BTS continue to hold high yield positions.
Trade talks continue to be the issue of the day. After recently announced US tariffs took affect China indicated it would need to take countermeasures which pushed markets down fearing a full-blown trade war. Around noon however Treasury Sec Mnuchin told reporters that trade talks were constructive and shortly after that China’s Vice Premier Liu echoed that sentiment saying things had gone “fairly well”. When markets heard that they turned and rallied higher into the closing bell. One interesting aspect of this trade spat is that it appears to be a bipartisan issue on capitol hill as both Democrats and Republicans are supportive of a tough stance on China’s longstanding propensity to engage in intellectual property theft, currency manipulation and forced technology transfers. Some money managers are adjusting to a possible world of higher trades by shifting investment dollars out of China and into emerging market nations which could see a boost if manufacturing begins to leave China to avoid US tariffs.
Uber came public today and opening trades were about 7% below the IPO price of $45 per share. This is the largest IPO since Faceplant came public back in May of 2012. Uber raised $82 billion. The company, which began operations in 2010, has disrupted the traditional taxi business. According to gurus however the company is “incinerating cash at impressive levels”. This will be a wild ride. Uber’s four business segments are Ride Share, Uber Eats, B2B and AI/autonomous flying taxis. Some are also speculating that Uber will eventually get into freight services and package delivery for companies like Amazon. Kind of like a vigilantly postal service