Traders Edge – Monday 20th August

Chinese and US negotiators are planning talks to resolve their trade row ahead of meetings in November, the Wall Street Journal reported on Friday. Additionally, Mexico’s Economy Minister Ildefonso Guajardo said he hoped to wrap up outstanding bilateral issues on the North American Free Trade Agreement by the middle of next week. “The threat of a trade war threatens economic activity,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco. “The fact that the administration might resolve (trade disputes) sooner rather than later, without a sustained time frame of slower economic actively due to tariffs, that bodes well for the market.”

Trade-vulnerable industrial stocks led advances by the S&P 500 and the Dow, with the S&P 500 industrial sector gaining 0.6 per cent. The sector was led higher by a 2.3 per cent rise in Caterpillar shares. For the week, the S&P and the Dow posted weekly gains, but the Nasdaq showed a loss for the same period. Following bleak forecasts, shares of Nvidia Corp and Applied Materials fell 4.9 per cent and 7.7 per cent, respectively, pushing the Philadelphia SE Semiconductor index 0.7 per cent lower.

Among the so-called FAANG group of momentum stocks, all but Apple Inc fell. The smartphone maker gained 2.0 per cent to an all-time closing high. Netflix posted its sixth consecutive loss. In addition to Apple and Netflix, the FAANG group includes Facebook, Amazon.com and Google parent Alphabet. Shares of Tesla dropped 8.9 per cent, their worst day in over two years after chief executive Elon Musk’s interview with the New York Times and a UBS note saying the company could lose $US6,000 ($A8,201) on every base Model 3 sedan due to powertrain costs.