Equities started the day higher with the Dow was up close to 200 points before reversing direction after Larry Kudlow, Trump’s Director of the National Economic Council, said there was no China trade plan in the works.  This contradicted an earlier report that President Trump had asked to have a draft for a China deal drawn up.  The Dow has given up a 200-point gain and is now down 200 points.

Dow Jones Industrial Average

Trade Balance Report for September

The trade deficit in September increased to $54 billion from $53.3 billion in August. Exports increased $3.1 billion as industrial supplies and materials increased $2.8 billion and capital good exports jumped $1.1 billion.  Capital goods imports increased $2.4 billion and consumer goods imports expanded by $2 billion. The deficit with China rose to $37.4, up $3 billion, and the real trade deficit was $87 billion.  The third quarter average is 10.2% more than in the previous quarter.  At this point, it is still too early to tell if the tariffs are working in reducing the trade deficit, especially with China.

The two biggest headwinds for the market continue to be the Fed and the U.S. dollar.  Wage growth is starting to work its way into pay checks, which should be a good thing.  Fed watchers are concerned the Fed will consider this inflationary and will raise rates.  The strong U.S. dollar has had a negative impact on multi-national company earnings, especially emerging market sales. 

U.S. Dollar Index

• The Dow is lower by 0.75%
• The S&P 500 is lower by 0.92%
• The Nasdaq is lower by 1.24%
• The Russell 2000 is lower by 0.22%

Breadth:

• NYSE decliners 1,816 to advancers 1,140; new 52-week highs 26 to new lows 70
• Nasdaq decliners 1,555 to advancers 1,431; new 52-week highs 40 to new lows 64

Have a great weekend.