After The Close - The stock market opened lower this morning, weakened further in the afternoon, but managed to recover some ground late in the session. Sentiment on Wall Street was quite negative today, as investors worried that a prolonged trade dispute between the U.S. and China could potentially lead to a global slowdown. Further, political tensions in Hong Kong seem to be of some concern at this point. At the end of trading today, the Dow Jones Industrial Average was down 391 points; the broader S&P 500 Index was off 36 points; and the NASDAQ was lower by 96 points.
Market breadth showed considerable weakness, as decliners outnumbered advancers by a solid margin on the NYSE. Of note, all of the major market sectors retreated. Specifically, the financial stocks and technology issues declined considerably, while the defensive utility issues logged more moderate losses.
Meanwhile, there were no major economic reports issued this morning. The lack of news may have sent traders looking to the international arena for information. Tomorrow will be a somewhat busier session. Specifically, we will get a look at the Consumer Price Index (CPI) for the month of July.
Elsewhere, in the corporate sector, it was a light day for company profit reports. However, shares of Sysco (SYY) advanced after the food distribuor posted soft top-line results, but better-than-anticipated earnings. Meanwhile, shares of pharmaceutical company Amgen (AMGN) moved nicely higher in price, as investors reacted favorably to a recent legal ruling that would protect the company’s key drug from competitors.
Technically, stocks have been quite volatile over the past couple of weeks. The broader S&P 500 Index is still sitting below its 50-day moving average, located near the 2,940 level. Clearly, Wall Street would like to see trade relations between the U.S. and China stabilize. Such a development might help improve confidence and bring the bulls back into the market. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell - Wall Street comes to work on Monday after a week of gyrations that raised the prospect for more choppiness ahead.
Escalating trade tensions with China caused stocks to be more volatile than usual during the first full week of August. For much of the year, markets rose during a period of calm, and were boosted by a more dovish monetary policy on the part of the Federal Reserve.
China’s devaluation of its currency a week ago caused considerable consternation among investors, as fears deepened that the Asian nation was moving aggressively to shore up its position.
Since then, though, the currency devaluation has come to be seen as more of defensive move.
Last week ended on a less-than-hopeful note for trade talks, though, when President Trump indicated that meetings may or may not take place in September.
There has been no shortage of bad news on the international front, either. News late last week that Great Britain’s economy contracted in the second quarter was unwelcome. The downturn was viewed as related to the nation’s pending departure from the European Union on October 31st. If the move goes forward without a deal setting terms to smooth the transition, there could very likely be less cross-border business conducted.
Elsewhere, the risk of a change in Italy’s government has contributed to the unsettled feeling in the investment community.
This morning, protests in Hong Kong have led to the cancellation of flights from the airport. The disturbances in Hong Kong have the potential to keep China focused more on matters close to home than on a trade deal with the United States.
The negative headlines have pushed down stocks from their recent highs and increased interest in perceived safe havens, such as gold and government bonds.
Global yields have fallen precipitously in recent months, reflecting the concern that the U.S.-China trade skirmish will dampen business growth. The yield on the benchmark 10-year Treasury note closed at 1.73% on Friday after beginning the year nearly a full percentage point higher.
Given the prospects of slower economic growth and a round of easing by the world’s central banks, Wall Street is increasingly inclined to believe that the Federal Reserve will lower interest rates further.
That view could eventually propel stocks higher but, as for this morning, the futures market is indicating a weak open. - Robert Mitkowski