Recovering. U.S. stocks rebounded on Tuesday after the previous session’s intense selloff. China’s central bank signaled it would keep the yuan from falling further. Take-Two Interactive stock was lifted by better-than-expected earnings, while the shares of leading drug distributors plunged sharply after a reported settlement proposal over the opioid crisis. In today’s After the Bell, we…
examine what “currency manipulator” means and how it could impact the market; check on drug distributors’ latest progress in opioid litigation; and wonder whether the Federal Reserve should take additional actions or not.
Game of Currency
Stocks recovered some of the losses from Monday, with all three major indexes closing with gains. The Dow Jones Industrial Average rose by 311.78 points, or 1.2%, to close at 26,029.52, while the S&P 500 added 37.03 points, or 1.3%, to finish at 2,881.77 and the Nasdaq Composite increased 107.23 points, or 1.4%, to 7,833.27.
Trade tensions between the U.S. and China continue to dominate the market’s focus. For the first time since 1994, the Department of Treasury designated China as a currency manipulator in a statement issued after Monday’s close.
China’s pattern of actions has violated its G-20 commitment to refrain from competitive devaluation, according to the Treasury Department, and Treasury Secretary Steven Mnuchin will now bring the matter to the International Monetary Fund and World Trade Organization to eliminate China’s “unfair competitive advantage.”
Still, Barron’s noted that the two global institutions can’t impose an exchange rate on a country, and other punitive actions are likely to take a long time. The labeling is largely symbolic, and economists expect the immediate consequences to be limited.
The People’s Bank of China signaled