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Stock Market Update — Thursday, Sept. 19

Stock Market Update Wall Street Wake-Up Call

Stocks sputtered at the close on Wall Street after an early rally fizzled and more in Thursday’s Stock Market Update.

Banks and industrial companies were the biggest decliners. Comerica dropped 1.3% and Southwest Airlines slipped 2%.

Health care and technology stocks led the winners. Microsoft rose 1.8% after announcing a buyback and dividend increase. Merck rose 1.1%.

Bonds fell. The yield on the 10-year Treasury rose to 1.80% from 1.78%.

On Wednesday, the Fed reduced its benchmark interest rate for the second time this year in a bid to keep the economy from stalling in the face of slowing economic growth overseas and uncertainty over the U.S.-China trade war.

Fed officials were sharply divided in their outlook for future interest rate policy. As a result, the central bank didn’t indicate clearly whether more rate cuts were likely this year. Still, it left the door open for additional rate cuts if the economy weakens.

“That’s a nuanced message that markets are beginning to feel comfortable with,” Warne said. “And the fact that the economic data today was a little better than expected is reassuring, as opposed to worrisome, in an environment where there’s a lot of variation among voting members (of the Fed).”

The Fed’s outlook for the U.S. economy, and that of corporations, has been clouded this year as the trade conflict between the world’s two biggest economies has escalated and multiple attempts at negotiating a resolution have failed.

Washington and Beijing were set to begin trade talks Thursday ahead of more formal negotiations set for next month.

Markets have rallied this month after both sides took steps to ease tensions in advance of the talks. That’s fueled speculation among investors that the U.S. and China may at least reach an interim deal in their costly trade conflict.

“A lack of escalation or potential de-escalation would be something that would be viewed positively by the markets,” said Bill Northey, senior investment director at U.S. Bank Wealth Management.

Meanwhile, France’s finance minister said Europe is ready to impose retaliatory tariffs next year on U.S. goods as part of a long-running dispute over subsidies to plane makers Airbus and Boeing.

STOCK MARKET UPDATE

KEEPING SCORE: The Dow Jones Industrial Average fell 52 points, or 0.2%, to 27,094, while the S&P 500 was essentially flat at 3,006. The gains for tech stocks helped the Nasdaq finish with a gain of 5 points, or 0.1%, at 8,182.

Major stock indexes in Europe finished mostly lower. Indexes in Asia were mixed.

ANOTHER RATE CUT: The Fed’s wasn’t the only interest rate decision to be digested.

The Bank of England also kept its main interest rate on hold at 0.75% with rate-setters opting to sit tight while waiting for some clarity to emerge on Britain’s exit from the European Union. And Japan’s central bank opted to keep its own monetary policy unchanged and its key interest rate at minus 0.1%. The decision came amid signs of weaker consumer demand and exports and dimming confidence in the business outlook.

HOME SWEET HOME: The National Association of Realtors said that sales of previously occupied U.S. homes climbed last month to a seasonally adjusted annualized rate of 5.49 million units, the best performance since March 2018. Sales have increased 2.6% from a year ago.

Mortgage rates have been hovering near historic lows, making buyers more eager to purchase a home despite rising prices amid a shortage of properties for sale.

Homebuilders marched broadly higher. PulteGroup gained 1.5%.

NOT SO TOUGH: U.S. Steel dropped 11.1% after it warned investors that its third quarter loss will be wider than anticipated.

UNAPPETIZING RESULTS: Darden Restaurants fell 5% after the owner of the Olive Garden and other restaurant chains reported first quarter results that disappointed investors. The company’s earnings topped Wall Street’s forecasts, but other performance metrics lagged amid weaker sales at some of Darden’s chains.

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