Stocks have seen a strong positive response to a surprising announcement by the U.S. Trade Representative's office that new tariffs on some key consumer products made in China, including cell phones, will be pushed out to mid-December, while a small number of products will be excluded from the list. At about the same time as the USTR announcement, China said that it held a call with U.S. representatives today and it will hold additional trade talks by phone with the U.S. in 2 weeks. The apparent progress on the trade front has soothed some market jitters, helping the major averages recover from yesterday's selloff.
ECONOMIC EVENTS: In the U.S., the Consumer Prices Index rose 0.3% month-over-month in July, with the core rate up 0.3% as well, both of which were a little hotter than expected. On a 12-month basis, headline consumer prices are up 1.8%, while core CPI rate excluding food and energy was up 2.2% year-over-year, showing a slight acceleration in inflation from the prior month.
The United States Trade Representative announced the next steps in the process of imposing an additional tariff of 10% on approximately $300B of Chinese imports, which will go into effect on September 1. Certain products are being removed from the tariff list based on "health, safety, national security and other factors" and will not face additional tariffs of 10%, the USTR said. Also, it was determined that the tariff should be delayed to December 15 for certain articles, including cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.
TOP NEWS: Shares of Apple (AAPL) are up 4% near noon after the USTR announced the next steps in the process of imposing an additional tariff of 10% on about $300B of Chinese imports, including a delay for certain articles such as cell phones and laptop computers. Prior to the USTR announcement, Wedbush analyst Daniel Ives had said he believes the company will absorb the first round of tariffs, while "aggressively looking" at alternative options within its supply chain.
Shares of Brinker (EAT) are down 2% after the owner of the Chili's and Maggiano's restaurant chains reported better than expected earnings and gave upbeat profit guidance for the upcoming fiscal year, but posted lower than expected quarterly sales.
In M&A news, Brookfield Business Partners (BBU) announced an agreement to purchase Genworth's (GNW) majority interest in Genworth MI Canada for approximately C$2.4B, or C$48.86 per share. Upon closing of the transaction, Genworth will no longer have beneficial ownership, control or direction over the purchased shares of the largest private sector residential mortgage insurer in Canada, the companies said.
MAJOR MOVERS: Among the noteworthy gainers was Deciphera (DCPH), which jumped 91% after reporting top-line data from its INVICTUS pivotal Phase 3 clinical study of ripretinib. Also higher was GTT Communications (GTT), which gained 12% after Dan Loeb's Third Point disclosed a 5.5% stake in the company.
Among the notable losers was Covetrus (CVET), which dropped 42% after reporting quarterly results and providing sales guidance for fiscal 2019. Also lower after reporting quarterly results was Bloom Energy (BE), which fell 38%.
INDEXES: Near midday, the Dow was up 407.96, or 1.58%, to 26,305.67, the Nasdaq was up 156.51, or 1.99%, to 8,019.92, and the S&P 500 was up 47.31, or 1.64%, to 2,930.40.