US open: Stocks go green as Washington grants Huawei a reprieve
By Iain Gilbert
Date: Tuesday 21 May 2019
(Sharecast News) - Wall Street trading began on a positive note on Tuesday as a mild semblance of calm seemingly returned to markets following Monday's tech sell-off.
As of 1530 BST, the Dow Jones Industrial Average was ahead 0.53% at 25,816.87, while the S&P 500 was 0.66% stronger at 2,859.03 and the Nasdaq traded 0.84% firmer at 7,767.38.
The Dow opened 136 points higher after the White House decided to temporarily ease the trade restrictions imposed on Chinese telecommunications giant Huawei Technologies late last week.
The Commerce Department will allow Huawei to purchase American-made goods in order to maintain existing networks and provide software updates to existing Huawei handsets until 19 August as part of an effort to minimise disruption for its users across the globe.
Despite the reprieve, Huawei chief executive Ren Zhengfei took aim at Washington on Tuesday, stating Donald Trump had underestimated just how powerful the company would be in the 5G space and revealed the firm had been stockpiling chips, leaving it well prepared for the blacklisting.
Discussing the logic behind the US's 90-day grace period, SpreadEx analyst Connor Campbell said: "The reason behind this is likely some trademark lack of forethought from the Trump administration, the government failing to anticipate the effect the blacklisting would have on the US side of things.
"However, it also is a bit of fire control for the bridge currently burning between the two nations, keeping the relationship alive ahead of next month's G20 meeting in Japan."
Elsewhere, almost 200 American footwear companies, including Nike and Under Armour, wrote a letter to the President, imploring him to cancel proposed tariffs on imported shoes from China. The shoemakers said the tariffs would be "catastrophic" for consumers, corporations and the economy alike.
In corporate news, Home Depot shares were down 0.32% at the bell as the hardware retailer beat first-quarter earnings expectations but fell short on same-store sales, while JC Penney shares slumped 11.30% after its first-quarter sales fell short of consensus estimates.
Kohl's crashed 12.47% in early trade after cutting its profit estimates, while Urban Outfitters was down 0.67% following an announcement that it would begin renting clothes.
On the data front, sales of US existing home sales unexpectedly fell in April, according to data from the National Association of Realtors.
Sales were down 0.4% from March to a seasonally-adjusted rate of 5.19m, missing expectations for a 2.7% increase. On the year, sales were 4.4% lower.
Meanwhile, the median price of an existing home was $267,300, up 3.6% from April 2018 and marking the 86th straight month of year-over-year gains.
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