Talk Is NOT Cheap. Stocks reversed directions and sank on reports that President Donald Trump directed aides to proceed with imposing 25% tariffs on $200 billion in Chinese products. So much for restarting trade discussions. In today's Intraday Update, we…
•…note that the market was otherwise poised to have a good day;
•…observe that financial stocks are leading the way;
•…highlight Advanced Micro Devices (AMD), which is getting a big boost from a price-target change.
Close but No Cigar
Stocks were grinding higher at the market's open Friday morning extending the week's gain-that is until news broke that President Donald Trump instructed aides to proceed with imposing 25% tariffs on about $200 billion more in Chinese goods. The Dow Jones Industrial Average is down 45 points, or 0.2%, to 26,099.76, the S&P 500 has dipped 0.2% to 2899.39, and the Nasdaq Composite has declined 0.2% to 7996.66.
Technology stocks are still the year's superstars. The sector has been the No. 1 driver of gains so far, up more than 17% so far this year. Given its 26% weighting in the S&P 500, the group would account for about 51% of the index's near-9% return, as DataTrek Research co-founder Nicholas Colas noted in his Friday morning missive. But on Friday financial stocks showed up after being missing-in-action for some time. The sector has risen 0.5% so far today, finally responding to the 10-year Treasury yield almost kissing 3% again. If the tariff news hadn't hit, financials could've helped the S&P 500 touch new highs, again. That seems less likely to occur now.
The S&P 500 kicked off September with four consecutive declines. When the index snapped the losing streak, it logged four consecutive days of gains into today. "Symmetry makes everything look neat, but in the world of publicly traded markets, it is fleeting," writes Frank Cappelleri, technical analyst at Instinet, in a note published Friday morning. "From late January through early April, the term "overbought" was as ominous as any. Rallies were meant to be sold, and they were."
Trade will continue to be an anchor on stocks, but perhaps dips, even minor ones are meant to be bought. Fundamentals are still good and investors appear to be taking bad trade news in stride with stocks attempting to hold onto their weekly gains. Meanwhile, volatility remains low with the Cboe Volatility Index bopping around in the low teens.
Next week will be a relatively quieter week of data with the September home builder survey expected on Tuesday, and August housing starts expected Wednesday. There are plenty of miles to go before this bull goes to sleep.
Adobe Systems (ADBE) is up 3%to $276.52 after reporting fiscal third-quarter earnings. The software giant beat expectations and also provided guidance that was higher than consensus estimates.
Advanced Micro Devices is up 4.1% to $31.72 after Argus nearly doubled its price target on the shares, to $40 from $23.
Nucor (NUE) is down 1.5% to $62.55 after saying it sees third-quarter earnings per share of $2.35 to $2.40, with a midpoint below the $2.39 consensus estimate.
Sarepta Therapeutics (SRPT) is up 2.7% to $154.22 after Bank of America Merrill Lynch resumed coverage with a Buy rating.
Yelp (YELP) is up 1.5% to $46.61 after Wedbush initiated coverage with an Outperform rating.
- Teresa Rivas
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