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After The Close - The stock market opened sharply lower this morning, remained under pressure in the afternoon, but received some relief from a bit of bargain hunting late in the session. Investors once again worried about the global trade situation. Of note, as the start of September, the Trump Administration put in place additional tariffs on imports from China, as negotiations have failed to make any concrete progress. China has responded with counter measures, making matters worse. These maneuvers clearly have not been resonating well with Wall Street or with the corporate sector. At the end of trading today, the Dow Jones Industrial Average was down 285 points; the broader S&P 500 Index was off 20 points; and the NASDAQ was lower by 89 points.

Market breadth showed a negative bias to today’s session, with decliners ahead of advancers by over two to one on the NYSE. From a sector perspective, the industrials and the technology issues lost considerable ground, while the defensive utility names managed to advance. Investors continue to flee to safe havens, such as gold and U.S. Treasuries. The yield on the 10-year note was at roughly 1.47 % today.  

Meanwhile, traders received a couple of economic news items this morning. Specifically, construction spending increased 0.1% in the month of July, where a slightly stronger reading had been anticipated. Also of importance, the ISM Manufacturing Index moved lower to 49.1, which was a weaker figure than had been forecast, and may have even come as a surprise to some. As a reading below 50 suggests a contraction, the report may have fueled fears that a possible recession is on the horizon. Looking ahead, at the end of the week, the government will release the August employment numbers. This is one of the more important economic reports and can play a role in the market’s direction. Meanwhile, in the corporate arena, it was a light day for company profit reports. The lack of information on this front probably did not help investor sentiment.

Technically, stocks have been bouncing up and down in a choppy range for the past couple of weeks. The S&P 500 Index is still below its 50-day moving average, located at around the 2,945 mark. Pushing stocks back above this key technical level will likely be the next big challenge for the bulls. However, if tensions with China persist, this will be a difficult task.  - Adam Rosner 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - Traders will soon return to their desks following the long Labor Day weekend, which we hope was a safe and enjoyable one for our readers, and which followed a higher week on Wall Street. The big reason for the late-August strength was the evolving sense that a détente on the global trade front was still achievable, notwithstanding the continuing on and off escalation in the long trade war with China. As the month of August ended, meantime, there were some seeming hints that China wanted a calm resolution to the rift, and that sentiment raised hopes that a deal could yet be brokered between the world's two largest economies.

As for the latest session, which followed a strong performance on Thursday, the stock market was off and running at the outset as the world's two largest economic players each were apparently showing some willingness to resolve their long-running dispute. So, after a few minutes of trading on Friday, the Dow Jones Industrial Average had jumped to a gain of about 150 points. The other key indexes had firmed up as well. However, new doubts apparently set in as the morning progressed, and as we hit the two-hour of the trading day, the indexes had all reversed course and fell into the red, with the NASADAQ taking the biggest hit.

Also influencing trading no doubt was a report put out by the University of Michigan showing that consumer sentiment fell sharply in August tumbling 8.6 points. That was its largest monthly decline since December 2012. Negative sentiment on trade, especially between the United States and China led the index lower. Also, of note the government reported that personal income edged up a scant 0.1% in July, following formidable increases of 0.4% and 0.5%, respectively, in May and June. However, spending perked up in the latest month increasing by 0.4%, or double the June rise.

Meanwhile, the stock market would firm anew as the morning ended. But the comeback seemed at the time to be half hearted, and did not take in the NASDAQ, which remained lower, but not significantly so. That irregular trading pattern would continue through the early to mid-afternoon, and as we moved inside the final two trading hours, the Dow was still higher, but just nominally so, while the NASDAQ remained in the deficit column. It seemed, at that time, as if Wall Street was marking, eagerly awaiting the start of the long holiday weekend.

This choppy trend would then continue for a while, but as the final hour moved along, the Dow would join the S&P 500 and the NASDAQ in the loss column, implying, at the time, that investors did not want to go into the long weekend with long positions as one could not foresee what the global and trade headlines would be over this stretch. As the session drew to a close, the market would firm up very selectively, with the Dow nudging back into the plus column, finally closing ahead by 41 points, while the S&P 500 would add two points, but the NASDAQ would still suffer an 11-point loss.

After that ho-hum session and the long weekend, investors are returning to find that stocks in Asia were mixed in the overnight hours, while in Europe, the bourses are mostly lower so far this morning as Europe awaits Brexit. Elsewhere, oil prices are somewhat weaker and U.S. Treasury note yields, off slightly on Friday, are now weaker again in early trading. Finally, the U.S. stock market seems poised to open the new week and month with losses as the latest round of U.S.-China tariffs take effect. - Harvey S. Katz, CFA

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.