Dow shrugs off impeachment talk

Hopes for trade deal with China remain high

By Anneken Tappe, CNN Business
Spencer Platt/Getty Images

(CNN) - The Dow and the US stock market finished lower Thursday, but investors continued to shrug off the impeachment inquiry into President Donald Trump.

The S&P 500 closed 0.2% lower, while Nasdaq Composite finished down 0.6%. The Dow ended down 0.3%, nearly 80 points.

Unmoved by impeachment hearings, investors turned instead to the economy. The final estimate of second-quarter US GDP growth was in line with expectations. It grew at an annualized rate of 2%.

The trade deficit expanded slightly to $72.83 billion in August. Jobless claims for the week ended September 21 were also broadly in line with expectations at 213,000.

Investors also paid close attention to speeches from Federal Reserve officials, including Vice Chairman Richard Clarida, who said the US inflation expectations are in a range in line with the central bank's 2% target. Interest rate cuts could drive inflation higher, suggesting that there is no need for further cuts now.

Elsewhere, Minneapolis Fed President Neel Kashkari said that he argued for steeper rate cuts because the US economy was not yet at its full capacity, according to Reuters.

The Fed cut rates by a quarter percentage point last week, two months after a similar cut in July. The average forecast from Fed officials, which is also known as the dot plot, doesn't foresee further rates action this year.

Hopes for a trade deal with China carried stocks higher Wednesday, with all three indexes recording their best day in two weeks. Trump said Wednesday a trade deal with China could happen soon. The S&P 500 and the Nasdaq snapped a three-day losing streak.

The United States also signed a trade deal with Japan on Wednesday, which reduced tariffs on some agricultural and industrial goods, and perhaps boosted hopes for a deal with China further.

"We have heard this sort of commentary before, and it hasn't always worked out, but the mood is upbeat nonetheless. President Trump has a habit of changing his tune when it comes to China, so some traders might remain skeptical of the remarks," wrote David Madden, market analyst at CMC Markets in a note.

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