On a day filled with mixed messages and no new signs of trade progress, the Dow spent the day in the red and sank a modest 54 points.  The consensus seems to be that the market has been rallied as much as it can be on trade optimism and is currently overbought so it is time for some consolidation.  As today’s expert says, “We’ve pushed this as far as we can. Valuations appear stretched at 18.5 times earnings” vs the 20-year average of 16.5.  The House passed two bills today supporting the Hong Kong protesters and critical of China which further angered China and is seen by the market as another roadblock in the trade war.  Volume was a little below average at 6.8 billion. 

thu  NOVEMBER 21, 2019 / 4:34 pm 

Wall Street dips as investors await U.S.-China trade progress

Sinéad Carew

DJ:  27,821.09  -112.93        NAS:  8,526.73  -43.93        S&P:  3,108.46  -11.72      11/20

DJ:  27,766.29  -54.80          NAS:  8,506.21  -20.52        S&P:  3,103.54  -4.92        11/21

(Reuters) - U.S. stock indexes moved slightly lower on Thursday as investors moved to the sidelines with mixed messages and no concrete signs of progress on U.S.-China relations.  The U.S. House of Representatives passed two bills to back protesters in Hong Kong and send a warning to China about human rights, a measure that angered Beijing.  But China still invited top U.S. trade negotiators for a new round of face-to-face talks in Beijing, the Wall Street Journal reported, citing unidentified sources.

This was a day after stocks sold off on a report that a phase 1 U.S.-China deal was not likely to happen this year. As a result, investors were wary of putting further bets on a trade deal and keeping in mind that stocks are still near record highs.  “The fulcrum of this optimism see-saw is the prospects for the phase 1 trade agreement. Investors are pulling petals from a daisy saying, ‘It’ll happen this year, it won’t,’” said Sam Stovall, chief investment strategist at CFRA Research in New York.  “They are basically saying ‘We’ve pushed this as far as we can.’ Valuations appear stretched at 18.5 times forward earnings compared with the 20-year average forward P/E Of 16.5,” he said.

The Dow Jones Industrial Average .DJI fell 54.80 points, or 0.2%, to 27,766.29, the S&P 500 .SPX lost 4.92 points, or 0.16%, to 3,103.54, and the Nasdaq Composite .IXIC dropped 20.52 points, or 0.24%, to 8,506.21. 

While the number of Americans seeking unemployment benefits was unexpectedly unchanged at a five-month high last week, suggesting some labor market softening, U.S. home sales increased more than expected in October and house prices rose at the fastest pace in more than two years amid lower mortgage rates and a supply shortage.  Jack Ablin, chief investment officer at Cresset Capital Management in Chicago, said there was not enough surprise in the data to generate a decisive market move.  “This is a market in search of a catalyst,” he said.

Three of the S&P 500’s 11 major industry sectors rose, with energy .SPNY showing the biggest gain at 1.6% as oil prices gained on hopes that OPEC and its allies were likely to extend output cuts until mid-2020.  Real estate .SPLRCR showed the biggest decline at 1.4%, while technology .SPLRCT was the biggest drag on the benchmark index with a 0.5% drop.

Shares in TD Ameritrade Holding Corp (AMTD.O) surged 16.9% after CNBC reported bigger rival Charles Schwab Corp (SCHW.N) was in talks to buy the discount brokerage. Schwab’s shares gained 7.3%. Rival E*Trade Financial lost 9.3%.  Tiffany & Co (TIF.N) gained about 2.6% after a Reuters report that LVMH (LVMH.PA) persuaded the jewelry chain to allow it to access its books following a raised bid. 

Declining issues outnumbered advancing ones on the NYSE by a 1.55-to-1 ratio; on Nasdaq, a 1.37-to-1 ratio favored decliners.  The S&P 500 posted 11 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 52 new highs and 88 new lows.

On U.S. exchanges, 6.83 billion shares changed hands, compared with the 7.05 billion average for the last 20 sessions.