Stocks are tentatively higher as the market is once again reacting mainly to trade-related headlines while generally looking past the large amount of U.S. economic data that was released this morning. The futures dropped in early morning trading after China's Ministry of Finance released a brief statement promising "necessary countermeasures" in response to the announcement from the Office of U.S. Trade Representative that it plans to impose a 10% tariff on a further $300B in Chinese exports. However, the futures reversed course and jumped to the upside later in the morning following headlines that China hopes it can "meet halfway" with the U.S. on trade issues. After the open, the major averages settled into a range that belied the early volatility and trading has been calm since then, though that could quickly change with the next trade headline or tweet.
ECONOMIC EVENTS: In the U.S., retail sales climbed 0.7% in July. Initial jobless claims climbed 9,000 to 220,000 in the week ended August 10. Nonfarm productivity grew at a 2.3% pace in the preliminary second quarter reading. The Philly Fed index fell 5.0 points to 16.8 in August. The Empire State index inched up 0.5 ticks to 4.8 in August. Industrial production fell 0.2% in July from a revised 0.2% increase in June. The NAHB housing market index rose 1 point to 66 in August. Business inventories were unchanged in June with sales up 0.1%.
TOP NEWS: Shares of General Electric (GE) are down 10% at midday after Harry Markopolos, the accounting expert who raised red flags about Bernie Madoff's Ponzi scheme, released a report on the company's accounting on a website called "GEfraud.com," claiming on the front page of the new site that GE is "a bigger fraud than Enron." In an interview with The Wall Street Journal ahead of the launch of the website, Markopolos said his group found GE's insurance unit will need to bolster its reserves by $18.5B in cash. He also faulted the way the company is accounting for its oil-and-gas business. Before the report was published, a GE spokeswoman told the Journal: "GE stands behind its financials. We operate to the highest level of integrity in our financial reporting and we have clearly laid out our financial obligations in great detail. While we can't comment on the detailed content of a report that we haven't seen, the allegations we have heard are entirely false and misleading."
Shares of Walmart (WMT) have gained 4% after results at the world's largest retailer beat expectations in the second quarter, prompting a guidance raise. Walmart now sees FY20 adjusted earnings per share down slightly to up slightly compared to last fiscal year and sees FY20 net sales growth of around 3% in constant currency.
Offsetting the boost that the Dow is getting from the post-earnings jump in Walmart is the negative reaction that Cisco (CSCO) is suffering following its own quarterly report. Cisco, which reported fiscal Q4 results that Piper Jaffray analyst James Fish said "were fine overall," also gave flat year-over-year guidance for its current quarter, contributing to the 7% decline in the stock.
MAJOR MOVERS: Among the noteworthy gainers was Alibaba (BABA), which rose 2% after the company reported better than expected revenue and earnings in the just-completed quarter in the face of worries about the impact of the ongoing trade fight on its business.
Also higher was Pivotal Software (PVTL), which jumped 68% after confirming it is in talks with VMware (VMW) regarding a potential business combination. VMware is negotiating a deal to acquire all of the outstanding shares of Class A common stock of Pivotal it doesn't already own for $15 per share in cash and has also requested in writing that Dell Technologies (DELL) exchange all of the outstanding shares of Class B common stock of Pivotal other than shares of Class B common stock of Pivotal held by VMware for shares of Class A Common Stock of VMware, the companies noted. Following the announcement, VMware shares are down 6% near midday.
Shares of Canopy Growth (CGC) were another notable decliner, sliding 13% following the Canadian cannabis producer's release of its quarterly results.
Also lower was Tilray (TLRY), which fell 9% after the earnings report from its peer and after Vertical Group analyst Gordon Johnson said its time to "back up the truck" and short the shares, which he sees having around 90% downside from their closing price Wednesday of $39.04.
INDEXES: Near midday, the Dow was up 67.29, or 0.26%, to 25,546.71, the Nasdaq was up 3.40, or 0.04%, to 7,777.34, and the S&P 500 was up 8.16, or 0.29%, to 2,848.76.