Stocks opened mostly flat on Thursday as market participants continued to focus on trade developments between the world’s two largest economies.
As of 1525 GMT, the Dow Jones Industrial Average was up 0.01% at 27,787.40, while the S&P 500 was 0.04% firmer at 3,095.25 and the Nasdaq Composite started out the session 0.09% weaker at 8,474.59.
The Dow Jones opened just 3.81 points higher on Thursday after closing higher in the previous session as market participants digested Federal Reserve chairman Jerome Powell’s testimony to the Joint Economic Committee of the US Congress, in which he noted that significant risks to the economic outlook remained.
Trade was still on the forefront of investors’ minds on Thursday, with talks between Washington and Beijing said to have hit a brick wall over the exact size and schedule for Chinese agricultural purchases, alongside a report on Wednesday that China was resisting requests from the US to curb tech transfers and for enforcement mechanisms.
Donald Trump said China had agreed to purchase up to $50bn-worth of soybeans, pork and other agricultural products from the US per year. However, China was said to be wary of putting a numerical commitment in the text of an agreement, according to the Wall Street Journal.
CMC Markets analyst Michael Hewson said: “The recent gains in equity markets over the past few weeks have been predicated on one particular outcome, that of the US and China arriving at some form of thaw when it comes to relations on trade.
“Reports last night that the US, China talks had hit a snag in their talks to agree on specifics when it comes to agricultural purchases, also pointed to the difficulties in trying to square the circle of an agreement, and this particular area was supposed to be the easy bit, with intellectual property and other more thorny issues pushed into a phase two.”
China reiterated its call for the US to roll back its trade tariffs as part of a preliminary trade deal between the two powers and pushed back on requests to provide detailed targets for increasing its purchases of US farm goods.
“The trade war was begun with adding tariffs, and should be ended by cancelling these additional tariffs. This is an important condition for both sides to reach an agreement,” China’s Ministry of Commerce spokesperson, Gao Feng, said.
Beijing tried to minimise the ongoing trade tensions by proposing that both countries roll back their tariffs after they had signed “phase one”, but Washington had reportedly balked at the idea.
Also in focus, data out overnight revealed that China’s factory output growth slowed by significantly more than expected in October, as weakness in global and domestic demand and the drawn-out Sino-US trade war weighed on broad segments of the world’s second-largest economy.
On the US data front meanwhile, the number of Americans filing for unemployment benefits rose by more than expected last week, according to figures released by the Labor Department on Thursday.
US initial jobless claims rose by 14,000 from the previous to 225,000, marking the highest reading since June. Economists had expected a level of 215,000.
Meanwhile, the four-week moving average came in at 217,000, up 1,750 from the previous week.
Elsewhere, wholesale inflation fell back by less than expected in October as energy and food prices bounced back.
According to the Department of Labor, so-called final demand prices increased at a month-on-month pace of 0.4% (consensus: 0.3%), while the annual rate of advance slipped from 1.4% to 1.1% (consensus: 0.9%).
Versus the month before, final demand prices for goods rose by 0.7% (foods: 1.3%; energy: 2.8%) and those of services by 0.3% (trade: 0.8%, transportation and warehousing: 0.3%, other: 0.1%).
In prepared remarks for a speech before the US House of Representative’s Budget Committee, Federal Reserve chairman Jerome Powell said he did not yet anticipate trade tensions spilling over from manufacturing into the rest of the economy.
San Francisco Fed chief Mary Daly and her opposite numbers at the Federal Reserve banks of New York and St. Louis, John Williams and James Bullard, respectively, were also set to address the media later on Thursday.
In corporate news, Walmart shares were up in early trade after the retail giant topped Q3 earnings estimates but its gains were offset by a decline in shares of Cisco Systems following some weak revenue guidance.