Stocks Climb Well Off Worst Levels But Still Close Lower - U.S. Commentary

(RTTNews) - After coming under pressure early in the session, stocks regained some ground over the course of the trading day on Friday. The major averages climbed well off their lows of the session, with the S&P 500 briefly turning positive.

The major averages all ended the day in negative territory, however, with the Nasdaq pulling back off yesterday's record closing high. The Dow fell 84.83 points or 0.3 percent to 25,090.48, the Nasdaq dipped 14.66 points or 0.2 percent to 7,746.38 and the S&P 500 edged down 3.07 points or 0.1 percent at 2,779.42.

For the week, the major averages turned in a mixed performance. While the Nasdaq jumped by 1.3 percent, the S&P 500 closed nearly flat and the Dow slid by 0.9 percent.

Renewed trade war concerns contributed to the weakness on Wall Street after President Donald Trump announced plans to impose a 25 percent tariff on $50 billion worth of Chinese goods that contain "industrially significant technologies."

Trump attributed the new tariffs to China's theft of intellectual property and technology and its other unfair trade practices.

"These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs," Trump said in a statement.

He added, "In addition, they will serve as an initial step toward bringing balance to the trade relationship between the United States and China."

Trump claimed he would impose additional tariffs on Chinese goods if China retaliates by imposing new tariffs on U.S. goods or services, raising non-tariff barriers, or taking punitive actions against American exporters.

Despite the threat, China announced new tariffs on 545 products imported from U.S., including agricultural products, vehicles and aquatic products.

China's Commerce Ministry previously accused Trump of launching a trade war and promised to impose tariffs matching the scale and intensity of the U.S. tariffs.

Negative sentiment may also have been generated by the release of a report from the Federal Reserve showing an unexpected decrease in industrial production in the month of May.

The Fed said industrial production edged down by 0.1 percent in May after climbing by an upwardly revised 0.9 percent in April.

The dip came as a surprise to economists, had expected production to rise by 0.2 percent compared to the 0.7 percent increase originally reported for the previous month.

The unexpected decrease in production came amid a pullback in manufacturing output, which largely reflected a disruption in truck assemblies due to a major fire at a parts supplier.

Sector News

While many of the major sectors climbed off their worst levels of the day, substantial weakness remained visible among energy stocks. The weakness in the sector came as the price of crude oil for July delivery plunged $1.83 to $65.06 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index tumbled by 2.5 percent, while the NYSE Arca Oil Index and the NYSE Arca Natural Gas Index slumped by 2.2 percent and 2.1 percent, respectively.

Significant weakness also remained visible among gold stocks, which moved lower along with the price of the precious metal. With gold for August delivery plummeting $29.80 to $1,278.50 an ounce, the NYSE Arca Gold Bugs Index sunk by 2.3 percent.

Steel and computer hardware stocks also showed notable moves to the downside on the day, while some strength emerged among utilities and telecom stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index climbed by 0.5 percent, while Hong Kong's hang Seng Index fell by 0.4 percent.

Meanwhile, European stocks moved mostly lower on the day. While the U.K.'s FTSE 100 Index plunged by 1.7 percent, the German DAX Index and the French CAC 40 Index dropped by 0.7 percent and 0.5 percent, respectively.

In the bond market, treasuries pulled back off their best levels of the day but managed to close in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.2 basis points to 2.924 percent.

Looking Ahead

Developments in the trade dispute between the U.S. and China may impact next week's trading along with reports on homebuilder confidence, housing starts, and existing home sales.