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Wobbly Week for US Stocks 05/17 16:21
Stocks fell broadly on Wall Street Friday as investor jitters over the
heated trade war between the world's two biggest economies overshadowed
encouraging developments in conflicts between the U.S. and other key trading
partners.
(AP) -- Stocks fell broadly on Wall Street Friday as investor jitters over
the heated trade war between the world's two biggest economies overshadowed
encouraging developments in conflicts between the U.S. and other key trading
partners.
The sell-off gained strength in the last hour of trading, handing the
benchmark S&P 500 index its second straight weekly loss.
News that the U.S. reached a deal with Canada and Mexico to scrap tariffs
imposed by the Trump administration last year on imported steel and aluminum
failed to cheer up investors. Nor did word earlier in the day that President
Donald Trump has delayed for six months a decision on taxing imported cars and
auto parts as trade negotiations continue with the European Union and Japan.
Those developments took a back seat to growing uncertainty over how
Washington and Beijing will resolve their costly trade dispute, which has
escalated the past two weeks. On Friday, published reports noted that Chinese
state media was sending signals that appeared to dim the prospects for progress
in the next round of negotiations.
"You had the good news in the delay in the auto tariffs, but the bad news is
it's going to be a long slog with high tariffs on China," said Tom Martin,
senior portfolio manager with Globalt Investments.
The S&P 500 fell 16.79 points, or 0.6%, to 2,859.53. Earlier in the day, it
had been down as much as 0.8% and up as much as 0.3%. After all its tumbling
around the last two weeks, the index remains 2.9% below the record it set last
month.
The Dow Jones Industrial Average lost 98.68 points, or 0.4%, to 25,764. It
slid 204 points earlier in the day. The Nasdaq composite dropped 81.76, or 1%,
to 7,816.28. The Russell 2000 index of small company stocks gave up 21.48
points, or 1.4%, to 1,535.76.
Major European indexes closed broadly lower.
Over the last week, the S&P 500 followed up its second worst day of the year
with three straight gains, only to falter Friday.
Escalating tensions between the world's largest economies have upended the
calm that dominated markets earlier this year, when a trade agreement seemed to
be in the works. The S&P 500 has twice dropped by at least 1.5% in the last two
weeks, as many times as it had in the first four months of the year.
Market swings within the course of a single day have become common in recent
weeks as investors react to developments in the United States' trade disputes
with other countries, primarily China. Trump made good on a threat to raise
tariffs on Chinese-made products, and China retaliated with tariffs of its own.
The threats were interspersed with some signs of reconciliation.
While the Trump administration has been pressing for change in trade terms
with the European Union, Japan, Canada and Mexico, the market has remained
focused mainly on the conflict between the U.S. and China, which has been
getting more heated.
The Trump administration has issued an executive order aimed at banning
Huawei equipment from U.S. networks. Another sanction that subjects the Chinese
telecommunications giant to strict export controls took effect on Thursday.
China has threatened to retaliate. It remains to be seen how the move will
affect trade negotiations, which are expected to continue.
"The trade issue could still get worse before it gets better, but our view
remains that a deal will ultimately be reached to resolve the issue given the
economic (and in Trump's case political) damage that would be caused if a deal
is not reached," Shane Oliver of AMP Capital said in a commentary.
Technology and industrial stocks took some of the heaviest losses Friday.
Utilities eked out a slight gain. Small company stocks fell more than the rest
of the market.
Deere was the biggest decliner in the S&P 500 after the tractor maker cut
its profit forecast for the year, citing slower sales from farmers worried
about exports, among other factors. The stock slid 7.7%.
The U.S. crackdown on Huawei Technologies continued to weigh on chipmakers
that supply the Chinese telecom company. Qorvo fell 6.1%, Skyworks Solutions
dropped 4.8% and Micron Technology gave up 3.4%.
Pinterest plunged after the technology company reported a larger loss for
the latest quarter than analysts expected. Shares of the digital pinboard
company, which began trading last month, dropped 13.5%.
A report showing that U.S. shoppers remain more confident than economists
expected helped spur a brief midmorning rally. The yield on the 10-year
Treasury fell as low as 2.36% Friday morning from 2.40% late Thursday. It
recovered to 2.39%.
Energy futures finished lower. Benchmark U.S. crude slipped 0.2% to settle
at $62.76 per barrel. Brent crude, the international standard, closed 0.6%
lower at $72.21 per barrel.
Wholesale gasoline dropped 0.7% to $2.05 per gallon. Heating oil fell 1.3%
to $2.10 per gallon. Natural gas lost 0.3% to $2.63 per 1,000 cubic feet.
Gold slid 0.8% to $1,275.70 per ounce, silver dropped 1% to $14.39 per ounce
and copper gave up 0.3% to $2.74 per pound.
The dollar rose to 110.11 Japanese yen from 109.87 yen on Thursday. The euro
weakened to $1.1160 from $1.1172.
(BAS)
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