By Sue Chang, MarketWatch , Ryan Vlastelica
Tilray slumps by double digits
U.S. stocks closed higher Thursday, with both the Dow Jones
Industrial Average and the S&P 500 setting records, as strong
economic data helped to alleviate concerns over escalating
U.S.-China trade tensions. Blue chips helped to fuel the rally,
with all but two of the Dow's 30 components finishing in positive
territory.
How did major benchmarks fare?
The Dow gained 251.22 points, or 1%, to 26,656, hitting a record
for the first time since January. The S&P advanced 22.80
points, or 0.8%, to 2,930.75, notching its first record since late
August.
The Nasdaq Composite Index rose 78.19 points, or 1%, to
8,028.23. The tech-heavy index moved within 1.3% of its all-time
high set last month.
Read: How recent trading on Wall Street has been lacking in
volatility
(https://www.marketwatch.com/story/what-trade-fears-us-stock-investors-are-extremely-calm-2018-09-1)
What drove the market?
Recent market gains have come on signs of steadily improving
fundamentals. In the latest economic data, first-time jobless
claims fell by 3,000 last week, dropping to their lowest level
since November 1969
(http://www.marketwatch.com/story/jobless-claims-fall-again-to-fresh-49-year-low-of-201000-2018-09-20).
Separately, the Philadelphia Fed manufacturing index jumped more
than expected in September
(http://www.marketwatch.com/story/philly-fed-manufacturing-index-rebounds-in-september-2018-09-20),
rising to 22.9 from 11.9 in the previous month.
Existing-home sales ran at a seasonally adjusted annual 5.34
million rate in August, virtually unchanged compared with July
(http://www.marketwatch.com/story/existing-home-sales-hold-steady-as-housing-starts-to-fumble-toward-balance-2018-09-20).
The nine-year-old U.S. expansion is poised for 3% growth in the
second half of 2018
(http://www.marketwatch.com/story/us-economy-poised-for-strong-second-half-of-2018-leading-indicators-show-2018-09-20),
according to an index that measures the nation's economic
health.
Such reports have helped to offset some of the adverse impact of
uncertainty surrounding trade policy.
Among recent developments, President Donald Trump earlier this
week reiterated his hard-line stance on China and said the U.S. had
"no choice" but to levy another $267 billion in duties on China.
That would come on top of announced tariffs on about $200 billion
in Chinese goods announced late Monday. China responded with
tariffs of 5% to 10% on $60 billion worth of U.S. products that
will take effect Sept. 24, and said it may introduce more measures
if the U.S. goes ahead with higher tariffs.
While many are concerned that a full-blown trade war will become
a huge headwind to global economic growth, investors have
repeatedly shrugged off the issue over the past several months,
choosing instead to focus on the strong economy.
Separately, many prominent Wall Street players have played down
the impact
(Read:How%20trade-war%20fears%20have%20become%20less%20of%20a%20factor%20for%20stock-market%20investors)
that the trade issue is having on the economy. Jamie Dimon, the
chief executive officer of JPMorgan Chase & Co. (JPM) , said
the U.S. wasn't in a trade war, but "a trade skirmish" of less
severity
(http://www.marketwatch.com/story/dimon-says-us-china-tariff-clash-is-a-trade-skirmish-not-a-war-2018-09-20).
Trump on Thursday also tweeted over his displeasure with the
Organization of the Petroleum Exporting Countries, or OPEC, over
rising oil prices.
Read:Trump blasts OPEC on oil prices, says cartel 'must get
prices down now!'
(http://www.marketwatch.com/story/trump-blasts-opec-on-oil-prices-says-monopoly-must-get-prices-down-now-2018-09-20)
What were analysts saying?
The market's resilience, and to some extent investors'
complacency to mounting trade friction, isn't necessarily a
positive development, according to Chris Zaccarelli, chief
investment officer at Independent Advisor Alliance.
"The end result is an ever-growing threat to the world economy
-- and to markets -- that may be ignored until it is too late,
especially because the imminent threat seems less than expected and
markets haven't sold off. For that reason, I believe caution is
warranted and I would take this rally with a grain of salt. I don't
think we can blow the all-clear sign until steps are in place to
resolve trade concerns with China, which are now more of a threat
than ever," he said in a note.
"Fundamentally and technically, the market is really strong
right now. Corporate earnings have been good, and economic data has
been really good. At the same time, there's a sense that China's
most recent trade retaliation wasn't as severe as expected, which
led to some optimism and relief that the situation may not turn
into a full-blown trade war," said Paul Brigandi, managing director
and head of trading for Direxion.
"The tariff situation isn't going away, and it will need to be
resolved, but until threats become official policy, the market can
ignore it," he said. "Certainly, what we've seen so far hasn't been
able to knock the momentum out of the market."
What stocks were in focus?
Shares of Canadian cannabis company Tilray Inc. fell 18%
following an extremely volatile patch of trading
(http://www.marketwatch.com/story/why-tilray-stock-is-susceptible-to-wild-price-swings-2018-09-19),
which resulted in it being halted five times in less than an hour
Wednesday. The stock has jumped nearly 600% over the course of the
past month, making it one of the most high-profile bets in the
legal cannabis space.
Shares of Red Hat Inc. (RHT) slumped 6.5% a day after it
reported revenue that was below expectations
(http://www.marketwatch.com/story/red-hat-stock-drops-on-revenue-miss-weak-outlook-2018-09-19)
and gave an outlook that was below the analyst consensus.
Darden Restaurants Inc. (DRI) dropped 1.2% after the company
beat fiscal first-quarter profit and sales expectations and raised
its full-year outlook
(http://www.marketwatch.com/story/olive-garden-parent-dardens-stock-jumps-toward-record-after-profit-and-sales-beat-raised-outlook-2018-09-20).
Shares of Galectin Therapeutics Inc. (GALT) jumped 15% after the
company commented on a cancer combination drug trial
(http://www.marketwatch.com/story/galectin-stock-lifts-15-premarket-on-early-cancer-combination-trial-results-2018-09-20).
Skechers USA Inc. (SKX) fell 4.5% after Cowen downgraded the
stock, citing its growing inventory and foreign-exchange pressures
(http://www.marketwatch.com/story/skechers-downgraded-on-growing-inventory-foreign-exchange-pressures-2018-09-20).
U.S.-listed shares of Rio Tinto(RIO.LN) rose 3.8% after the
mining giant unveiled plans to buy back a swath of its
Australia-listed shares
(http://www.marketwatch.com/story/rio-tinto-outlines-32-billion-share-buyback-plan-2018-09-20)
before the end of the year as part of its move to return about $3.2
billion in proceeds from the sale of coal assets to its
shareholders.
What were other markets doing?
Asian stocks mostly rose as investors shrugged off trade
tensions. Japan's Nikkei rose for a fifth straight session
(http://www.marketwatch.com/story/asian-markets-mostly-rise-as-nikkei-eyes-5th-straight-gain-2018-09-19)
and European markets gained
(http://www.marketwatch.com/story/europe-stocks-on-cusp-of-longest-win-streak-since-summer-2018-09-20)
across the board.
Crude-oil prices turned lower
(http://www.marketwatch.com/story/us-oil-benchmark-extends-climb-above-2-month-high-2018-09-20)
following Trump's OPEC tweet while gold settled slightly higher
(http://www.marketwatch.com/story/gold-rises-padding-weekly-advance-as-dollar-index-deepens-september-retreat-2018-09-20).
The U.S. dollar index extended losses.
(END) Dow Jones Newswires
September 20, 2018 16:24 ET (20:24 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.