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30 July 2019

Major US stock indexes finished trading below zero

Major US stock indexes fell slightly, as technology company shares came under pressure due to heightened concerns about the US trade deal with China, as well as before the publication of Apple's quarterly reports (AAPL). In addition, investors are preparing to announce the outcome of the July Fed meeting on Wednesday.

US President Trump resumed his attacks on China, weakening investors' hopes that the two largest economies in the world would reach a trade deal. On Tuesday, when a new round of US-China trade negotiations began in Shanghai, Trump said in a series of Twitter messages that China is not keeping its promise to buy more American agricultural products. He also warned China not to wait for the completion of his first term, adding that if he was re-elected at the November 2020 presidential election, the result could be a lack of agreement or tougher conditions.

The two-day meeting of the Federal Open Market Committee (FOMC) started today, the results of which will be announced tomorrow at 18:00 GMT. Investors expect the Central Bank for the first time since 2008 to cut rates by 25 basis points. The Fed, which seeks to keep inflation at 2%, has experienced growth problems in recent months, despite a healthy economy and low unemployment. This may indicate that the current level of rates may be too high, even if they are well below historical standards. Of particular interest to the markets will be prompting from the Fed on the possibility of further rate cuts in the coming months. Economists basically expect one to three rate cuts this year.

Meanwhile, in the US, the quarterly reporting season continues. Over 52% of the S & P 500 companies have reported quarterly results. According to FactSet, their 75% of these companies showed higher than expected earnings for the reporting period. After the close of the trading session, the release of Apple's quarterly reports (AAPL), Advanced Micro (AMD), Baidu (BIDU) and others is expected.

Market participants also received several important macroeconomic reports. Thus, the report of the US Department of Commerce showed that personal income and expenses in the United States increased in June in accordance with economists' forecasts. According to the report, in June, personal income increased by 0.4%, which corresponds to the downwardly revised May figure. Personal expenses rose 0.3% in June after rising 0.5% in May. Expenditures were expected to increase by 0.3%.

The Conference Board report indicated that the consumer confidence index in July rose to 135.7 (1985 = 100) from 124.3 in June. Analysts had expected the index to grow only to 125.0. According to the report, the current situation index, based on consumers ’assessment of current business and labor market conditions, rose from 164.3 to 170.9, while the expectations index, based on short-term consumer forecasts for income, business, and labor market conditions, rose from 97.6 to 112.2.

Most of the components of DOW finished trading in the red (21 out of 30). Pfizer Inc. shares turned out to be an outsider. (PFE; -6.62%). The growth leader was the shares of The Procter & Gamble Co. (PG; + 3.62%).

Most sectors of the S & P recorded a decline. The largest decline was shown by the technology sector (-0.7%). The sector of conglomerates grew the most (+ 0.9%).

At the time of closing:

Dow 27,198.15 -23.20 -0.09%

S & P 500 3,013.18  -7.79 -0.26%

Nasdaq 100 8,273.61 -19.72 -0.24%

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