The market was powering higher until news from multiple sources hit saying President Trump has given aides the green light for tariffs on $200 billion in Chinese exports.  I don’t think that’s really news since these tariffs were already announced, but there was an emerging narrative they would be put on hold in part because of Hurricane Florence, and more importantly, because of news of potential high-level talks between the countries.

New news and reaction mask the fact the market was moving higher even as the 10-Year Treasury yield touched 3% and former Trump campaign manager Manafort has agreed to cooperate with prosecutors.

Great Economic Data Including:

Consumer Confidence

Industrial Production

Industrial production increased 0.4%, as expected, in August.  This followed an upwardly revised 0.4% increase (from 0.1%) in July.  Manufacturing output rose 0.2%, led by a 4% increase in automobiles and parts.  Excluding automobiles, manufacturing was unchanged, with production falling for computers and electronics, as well as appliances.  Mining increased 0.7% and utilities output rose 1.2%.  Utilities output confirms the increase in manufacturing activity the economy is experiencing.  Year-over-year, industrial production is higher by 4.9%.  With industrial production on the rise, capacity utilization rose to 78.1% from 77.9% in July.  Capacity utilization is an indication of how much “slack” is present in the economy. It is currently 1.7% below its long-term average.

Export/Import Prices

Export and import prices declined in August for the second straight month.  Export prices declined 1% and were down 0.2%, excluding agriculture.  A strong U.S. dollar contributed to a decline in import prices, which were down 0.6%, and -0.1% excluding fuel.  Year-over-year import prices rose 3.7% and have not seen a 12-month decline since October 2016.  Import fuel prices declined 3.9% in August, this was the first decline since March (-2.6%).  Import prices for nonfuel industrial supplies and materials and capital goods were lower, while prices for foods, feeds, and beverages rose.  Lower prices confirm what we saw in the Producer Price Index earlier in the week.

Equites were marginally higher on the open but have since turned lower after President Trumps comments. 

• The Dow is lower by 51 points, 0.21%, at 26,096
• The   S&P 500 is lower by 5.92 points, 0.20%, at 2,898
• The Nasdaq is lower by 24.50%, 0.321% at 7,989
• The Russell 2000 was higher by 4.4 points, 0.26%, at 1,718

Breadth:

• NYSE advances 1,290 to declines 1,618; new 52-week highs 94 to new lows 85
• Nasdaq advances 1,531 to declines 1,357; new 52-week highs 131 to new lows 59

Our thoughts and prayers continue to go out to all those in the path of Hurricane Florence.