The Dow and the US stock market rose slightly Thursday after Walmart reported strong earnings and a brighter forecast and China said it remained hopeful about a trade war resolution with the United States.
Walmart said its outlook for the rest of 2019 has improved after Americans shopped more at US stores in the second quarter. With its huge network of thousands of stores, Walmart is a bellwether for consumer spending.
For investors, that contrasted with a threat from China. On Thursday, the Chinese Ministry of Finance said it would “take necessary countermeasures” after the United States earlier this month announced a new 10% tariff on $300 billion in Chinese goods. China said the new tariffs “seriously violated the consensus” Presidents Donald Trump and Xi Jinping agreed to at the G20 meeting earlier this year.
China has previously said it would retaliate against any new tariffs tit for tat, but the statement nonetheless spooked markets.
Yet China’s Foreign Ministry spokeswoman Hua Chunying then calmed investors fears in a press conference Thursday, when she said China remains hopeful that the United States and China can “work out a mutually acceptable solution.”
The Dow gained 100 points. The S&P 500 was 0.4% higher. The Nasdaq, a barometer for the tech industry, was up 0.4%. Tech companies would be particularly hurt by a trade war escalation.
Despite a healthy US economy and relatively strong corporate earnings, three dark clouds have intermittently loomed over the American stock market over the past year and a half: The global economic slowdown, the trade war and spooky warning signs in the bond market.
All three of those bad omens have now converged.
More signs of the global economic slowdown emerged Thursday, as China injected $2.4 billion in stimulus into the Hong Kong economy, according to Bloomberg. The Hong Kong protests have hurt the tourism economy. The airport has been shut down after protesters barricaded themselves inside.
Wednesday, the yield curve between the 10-year and 2-year Treasury bonds inverted. That classic recession signal scared investors. Although the 2/10 yield curve has reverted, Treasury yields, which move in opposite direction to bond prices, remained lower Thursday. The 30-year yield briefly tumbled below 2% for the first time in history.
— CNN’s Serenitie Wang and Steven Jiang contributed to this report.