U.S. Stocks Turn Lower As Optimism About Trade Deal Fades

(RTTNews) - After seeing modest strength throughout the morning, stocks once again came under pressure in afternoon trading on Friday. The major averages pulled back well off their best levels of the day and firmly into negative territory.

The major averages ended the day off their lows of the session but stuck in the red. The Dow fell 159.72 points or 0.6 percent to 26,935.07, the Nasdaq slid 65.20 points or 0.8 percent to 8,117.67 and the S&P 500 dropped 14.72 points or 0.5 percent to 2,992.07.

With the downturn on the day, the major averages also moved lower for the week, the Dow slumped by 1 percent, while the Nasdaq and the S&P 500 fell by 0.7 percent and 0.5 percent, respectively.

Stocks showed a notable move to the downside on news Chinese trade negotiators canceled a scheduled visit to U.S. farm states next week.

The Chinese delegation was in Washington this week for deputy-level trade talks and had been scheduled to visit American farms next week as a gesture of goodwill.

However, the Montana Farm Bureau revealed that the visit has been canceled, as the delegation is heading back to China sooner than expected.

The news offset some of the recent optimism about a potential end to the U.S.-China trade war, with the deputy-level talks expected to help pave the way for more productive high-level talks next month. Comments from President Donald Trump indicating he is not interested in a "partial deal" with China also dashed hopes of a possible "interim deal."

Trump also told reporters he doesn't think he needs to reach a trade deal with China before the 2020 elections, claiming the U.S. is not being affected by the trade war.

Uncertainty about the outlook for interest also weighed on stocks, with Boston Federal Reserve President Eric Rosengren arguing that it is not necessary and potentially risky for the central bank to continue lowering rates.

Rosengren noted in a speech at the Stern School of Business at New York University that the U.S. economy has held up well in the face of trade-related impediments.

"Additional accommodation is not needed for an economy where labor markets are already tight - and risks further inflating the prices of riskier assets, and encouraging households and firms to take on what may be too much leverage," Rosengren said.

Reflecting a divide at the Fed, Rosengren's speech came the same day St. Louis Fed President James Bullard released a statement explaining his preference for cutting interest rates by 50 basis points at the Fed meeting earlier this week.

Bullard cited signs that U.S. economic growth is expected to slow in the near horizon as well as continued indications of low inflation.

Sector News

Semiconductor stocks showed a significant move to the downside on the day, dragging the Philadelphia Semiconductor Index down by 1.8 percent.

Xilinx (XLNX) posted a steep loss after the chipmaker said its CFO Lorenzo Flores is stepping down from his position to pursue another executive opportunity.

Considerable weakness also emerged among computer hardware stocks, as reflected by the 1.4 percent drop by the NYSE Arca Computer Hardware Index.

Retail, tobacco, and oil service stocks also came under pressure over the course of the session, while gold and pharmaceutical stocks showed strong moves to the upside.

Other Markets

In overseas trading, most stock markets across the Asia-Pacific region moved modestly higher during trading on Friday. Japan's Nikkei 225 Index and China's Shanghai Composite Index both edged up by 0.2 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index slipped by 0.2 percent, the German DAX Index inched up by 0.1 percent and the French CAC 40 Index climbed by 0.6 percent.

In the bond market, treasuries moved modestly higher after recovering from initial weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.9 basis points to 1.755 percent.

Looking Ahead

Next week's trading may be impacted by a batch of key U.S. economic data, including reports on consumer confidence, new home sales, durable goods orders and personal income and spending.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos


    Founded in the late 1990s by Andrew Mariathasan in New York, with the goal of covering Wall Street for a new generation of investors, RTTNews has expanded steadily over the years to become a trusted provider of content for a wide array of subjects across several platforms. RTT's Financial Newswire is relied upon by some of the world's largest financial institutions, including banks, brokerages, trading platforms and financial exchanges.

    Learn More