Dow Jones drops more than 500 points, adding to week’s steep losses on US markets
August 9, 2019
US STOCKS-Wall Street set to open lower as investors…
August 12, 2019U.S. stocks headed lower Friday morning, after a week of volatile trade, as comments from President Donald Trump implied that a near-term resolution between the U.S. and China on tariffs wasn’t forthcoming.
How did benchmarks perform?
The Dow Jones Industrial Average DJIA, -0.21% fell 220 points, or 0.9%, at 26,221, the S&P 500 index SPX, -0.52% slipped 29 points, or 1%, to reach 2,910, with the information technology sector XLK, -0.88% down 1.2% and energyXLB, -0.58% heading 1% lower. Meanwhile, the tech-heavy Nasdaq Composite Index COMP, -0.81% declined 1.2% to 7,946, off 93 points.
On Thursday, the Dow DJIA, -0.21% rose 371.12 points, or 1.4% to 26,378.19, the S&P 500 index climbed 54.11 points, or 1.9%, to close at 2,938.72. Meanwhile, the Nasdaq climbed 176.33 points to finish at 8,039.16, a rise of 2.2%.
For the week, the Nasdaq and S&P 500 are on track for a weekly fall of 0.5% and the Dow is down 1% so far this week.
What’s driving the market?
Trump told reporters on Friday that things are doing “very well with China, but he’s not ready to make a deal.” He also said that he could cancel a coming September meeting of Sino-American trade negotiators. “We’ll see whether or not we keep our meeting in September. If we do, that’s fine. If we don’t, that’s fine,” the president said at the White House on his way to a fundraiser in the Hamptons, New York.
Wall Street has seen whipsawing action all week amid concerns about Trump’s tariffs on imports from China.
Late Thursday, reports also indicated that the Trump’s administration wasn’t ready to let U.S. companies resume doing business with Huawei Technologies Co. as Beijing has refused to purchase U.S. agricultural goods as a part of an earlier agreement, Bloomberg News reported (paywall).
The development marked the latest move in the testy confrontation between the two superpowers that has helped to collapse a detente achieved temporarily in May when Trump and President Xi Jinping met on the sidelines of the G-20 gathering in Osaka, Japan.
However, worries that Beijing would weaponize its onshore currency, the yuanUSDCNY, +0.2441%, have not immediately been realized. The People’s Bank of China on Friday in Asian hours set the daily reference rate for the yuan to 7.0136, which eased some fears that the second-largest economy would push to weaken its monetary unit. The PBOC allows the yuan to drift within 2% of the midpoint.
Meanwhile, Italian government bonds were in focus after Deputy Prime Minister Matteo Salvini, the head of the far-right League party, sought to dissolve parliament and trigger elections, which stoked a run for safe haven assets driving sovereign debt yields lower.
“Another volatile trading session is the making as the global macro news worsens thus maintaining a murky outlook for stocks,” wrote Peter Cardillo, chief market economist at Spartan Capital Securities.
The 10-year Treasury yielded just around 1.70% early Friday, with comparable German bonds TMBMKDE-10Y, -3.15%, a proxy for the health of eurozone economy, at negative 0.579%, hovering near a record low.
A report on U.S. producer prices, the producer-price index, showed wholesale prices increased 0.2% last month, matching the forecast of economists polled by MarketWatch. However, wholesale inflation over the past year was unchanged at 1.7%. A more closely followed measure that strips out volatile food, energy and trade-margin costs fell for the first time in almost four years. The so-called core PPI dipped 0.1%.
Which stocks were in focus?
Shares of Uber Technologies Inc. UBER, -6.91% were down 7% after the ride-hailing service reported a huge $5.24 billion quarterly loss.
Shares of Gilead Sciences Inc.’s GILD, +0.39% were 0.4% higher after its drug Biktarvy was approved for the treatment of HIV-1 in China, the company said Friday.
J.C. Penney Co. Inc. JCP, -12.10% received a delisting notice from the Securities and Exchange Commission because its shares have been trading below a threshold for an extended period. Shares of the company, at 61 cents, were down 12.1% in Friday action and have been down 42% thus far in 2019.
McDonald’s Corp. stock MCD, +1.52% rose 0.9%, to pace just the 6 of 30 Dow components that were gaining ground. The fast-food behemoth’s stock was headed for a fourth-straight gain, and a third-straight record close.
What other assets are in focus?
Gold futures for December delivery GCZ19, +0.10% were trading flat.
Oil prices bounced sharply higher. U.S. oil prices CLU19, +4.19% rose 2.7% to trade at $53.89, adding to a 2.8% rally on Thursday on the New York Mercantile Exchange.
In Asia, Japan’s Nikkei 225 Index NIK, +0.44% gained 0.4%, Hong Kong’s Hang Seng Index HSI, -0.69% HSI, -0.69% fell 0.7%, while the CS1 300 index000300, -0.97% shed 1%.
The pan-European Stoxx 600 SXXP, -0.84%, meanwhile, headed 0.4% lower.
