Trade Setup for Wednesday – NASDAQ, S&P 500 posted gains, Walmart gains 2% share value

Trade Setup for Wednesday

The US stock market is gearing up for trade on February 20 after a broadly positive sentiment on the previous day. The Dow Jones Industrial Average was nearly flat on February 19 while the NASDAQ and the S&P 500 posted gains after President Donald Trump displayed flexibility on the trade deadline between the country and China which is currently set for March 1.

Stock indices remained in the green for the first trading day of the week; markets were closed on February 18 for Presidents day. The materials sector pushed the S&P 500 up while Amazon and Netflix drove the gains in the NASDAQ Composite.

The past few sessions have seen stock indices rising on the progress in trade discussions going on between the US and China and some of it can be expected to continue driving trade. US Trade Representative Robert Lighthizer and China’s vice premier and chief trade negotiator Liu He have been leading discussions for their respective countries to avoid preventing an increase in tariffs on Chinese goods by March 1. If no consensus is reached, the 10% tariffs currently levied by the US of $200 billion worth of imports from China will rise to 25%.

Positive sentiment has prevailed so far with Trump stating that the current March 1 deadline is not a “magical date” and expressing satisfaction of the progress of discussions. It is likely te may push the deadline even if no deal is reached but the discussions remain on track and don’t breakdown. Investors should watch out for some profit selling, though.

Top 10 stock market news of the day

Among stock specific news, Walmart shares gained over 2% after its earnings bettered expectations. Some companies released their results after market hours. Devon Energy shares jumped after it released its earnings and announced its decision to separate its Canadian and Barnett Shale assets. Shares of Cadence Design also gained as its earnings beat analyst estimates. On the other hand, stock prices of Concho, LendingClub, and Diamondback Energy lost as their results left markets disappointed.

Investors can watch out for several corporate earnings results on February 20 as well. Among companies which are scheduled to release results are CVS Health Corp, Newmont Mining, and Targa Resources which will do so before market open while Analog Devices and Southern Co will do so during the day. 500.Com, Alleghany Corp, Agilent Technologies, Jack in the Box, Noble Corporation PLC, Cheesecake Factory, Diamond Hill Investment Group, SM Energy, Edison International, and GoDaddy Inc are some of the companies which will release their results after market close.

Among interesting developments which can form a base for trades are Amazon increasing its expanse in the logistics and shipping industry via Amazon Air. The company is handling shipping for 26% of online orders according to Wolfe Research. This can not only help the company control costs and delivery speed, it presents a challenge to companies like FedEx and UPS as well as the US Postal Service.

Meanwhile, auto major Ford has decided to stop selling heavy commercial trucks in South America, though it will not pull out of the region altogether.

A key release to watch out for is the release of FOMC meeting minutes for January. MBA Mortgage Applications data for February 15 can have some impact as well.

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