US stocks closed lower on Friday as the tech-laden Nasdaq Composite registered its first consecutive drop since mid-May, while investors worried about rising Sino-American tensions and lack of progress in another. fiscal stimulus bill in Washington.
The increase in coronavirus cases in 40 US states is also limiting consumer and commercial activity and threatening economic recovery.
The Dow Jones Industrial Average DJIA,
it decreased 182.44 points, or 0.7%, to close at 26,469.89; the S&P 500 SPX index,
it yielded 20.03 points, or 0.6%, closing at 3,215.63; and the Nasdaq COMP composite index,
it fell 98.24 points or 0.9% to close at 10,363.18.
The Nasdaq-100 NDX,
Comprising the largest companies on the Nasdaq, it was down 0.9% to 10,483.13.
For the week, the Dow ended 0.8% lower, the S&P 500 declined 0.3% and the Nasdaq lost 1.3%. The Nasdaq-100 skidded 1.5% during the week, and the Russell 2000 RUT,
, which tracks the smallest companies, finished 0.4% lower.
What drove the market?
Stocks ended the week with losses as appetite cooled as tech giants carried the burden of the recent multi-month escalation in the overall market.
Nasdaq Composite valuations are 22% above their long-term price trend, but that compares with 280% above trend during the heyday of the dot-com bubble in 2000, said Keith Lerner, chief strategist at SunTrust Advisory Services market.
“Absolute valuations are high, but they are less than half the levels reached at the time,” said Lerner. “The growing influence of a small group of stocks is a risk to the overall market, although these same companies are also contributing an increasing amount of cash flow and earnings.”
Wall Street has been buoyed by quarterly results that have exceeded a low bar amid the pandemic, but a rise in gold prices to a near record and super-low yields on government debt mean investors are concerned about The market remains vulnerable to post-Nasdaq pullbacks and the S&P 500 Index posted its worst daily declines since June 26 on Thursday.
Asian markets fell overnight Friday when Beijing retaliated against the United States by ordering the closure of the country’s consulate in Chengdu, with tensions between the world’s two largest economies increasing from trade friction to visa restrictions earlier. Earlier this week, the United States ordered China to close its Houston consulate.
President Donald Trump, during a coronavirus press conference on Thursday, also said that a trade pact between China and the United States “means less to me now than when I did.”
Trump’s comments came on Thursday when Secretary of State Mike Pompeo called on governments around the world to join the United States in confronting the leaders of the Communist Party of China. “The kind of compromise we have been looking for has not brought the exchange rate within China that President Nixon had hoped to induce,” Pompeo said in a speech.
“Traders fear this may be the start of a dispute between the world’s two largest economies,” wrote David Madden, market analyst at CMC Markets UK.
Until now, tensions between China and the United States have been ignored in favor of focusing on the public health crisis and fiscal stimulus.
But more recently, all of those issues directly collided with a possibly overpriced market, said Will Geisdorf, a senior research analyst at Sarasota-based Allegiant Private Advisors.
“We are in the midst of a pandemic and the markets are sitting just above their year highs,” Geisdorf said in an interview. Several sectors, in fact, are at all-time highs.
The weakness in risk assets this week probably represents a “consolidation” rather than a response to the big headwinds, Geisdorf thinks. Markets would react much more strongly if investors did not believe that Congress would eventually approve some kind of additional stimulus, he said.
Read: ‘I certainly don’t think we are near the end of this.’ Fauci tells MarketWatch: I would not get on a plane or eat inside a restaurant
Markets softened on Thursday after Senate Republicans, led by Majority Leader Mitch McConnell, abandoned plans to launch a proposal for the upcoming coronavirus relief bill due to continued differences between them, nearly ensuring that a deal on a new round of stimulus to help curb the economy the damage caused by the viral outbreak will not come before a provision that allows for $ 600 in additional weekly unemployment benefits expires at the end of the month.
On the economic front, IHS Markit flash manufacturing PMI increased to 51.3 in July from 49.8 in the previous month, weaker than estimates for 51.4, while flash service PMI increased to 49.6 in the month from 47.9 in the month. earlier, also below expectations at 50.4, according to Econoday. The composite flash PMI for July was 50 compared to 47.9 in June.
A report on new home sales showed a 13.8% increase in June, reaching an annual rate of 776.00 compared to 682,000 reviewed in the previous month.
On the health front, the global count of confirmed cases of the coronavirus causing COVID-19 rose above 15.5 million on Friday, according to data added by Johns Hopkins University, and the death toll rose to 633,656. The United States added more than 69,900 cases Thursday, according to a New York Times tracker, which shows cases on the rise in 40 states in the past 14 days, led by Florida and Louisiana.
What actions were in focus?
- Intel Corp. shares INTC,
-16.24%
They gained 16.2% and rival shares in Advanced Micro Devices Inc. gained 16.5%, after Intel reported that its next generation of semiconductor technology will be delayed and that it may actually use a third party to manufacture it as a contingency plan. . - Schlumberger Ltd. SLB,
+ 0.93%
He said Friday that he had a net loss of $ 3,434 billion, or $ 2.47 a share, in the second quarter, after revenue of $ 492 million, or 35 cents a share, in the same period last year. Shares were up 0.9%, reversing previous losses. - E-Trade Financial Corpshare ETFC,
-0.90%
It fell 0.9% after the online brokerage service reported second-quarter fiscal results that slightly exceeded Wall Street estimates. - Actions of Honeywell International Inc. HON
-2.79%
It fell 2.8% after the diversified industrial company reported second-quarter profit and sales that fell, but exceeded expectations. - Actions of Goldman Sachs Group Inc. GS,
-0.76%
He gave up 0.8% on Friday, after Bloomberg reported that the bank will pay $ 3.9 billion as part of a deal that would see Malaysia drop all criminal charges for its role in the 1MDB corruption case. - Actions of American Express Co. AXP
-1.38%
It fell 1.4%, after the credit card and travel services company reported a surprise profit for the second quarter, but revenue fell more than expected, amid declining spending by members of the card and a lower average discount rate. - Electric vehicle manufacturer Tesla shares TSLA,
-6.34%
They were Friday, 6% less on Friday because the technological actions were affected. - Verizon Communications Inc. VZ
+ 1.79%
It beat earnings and revenue expectations for its second quarter on Friday, but the wireless company’s shares fell slightly in pre-market trading. Shares were up 1.8%.
How did other markets trade?
In Asia, China’s CSI 300 meter 000300,
closed 4.4% lower, the Shanghai Composite Index decreased 3.9%, while the Hong Kong Hang Seng HSI Index,
shed 2.2%.
In Europe, the Stoxx 600 Europe SXXP index,
headed 1.3% lower, while the UK’s FTSE 100 UKX,
shed 1%.
GCQ20 Gold Futures,
it closed at a record high on Friday, up 0.4%, to settle at $ 1,897.50 an ounce on the New York Mercantile Exchange, according to records dating back to November 1984.
September futures for the US benchmark crude oil index CLU20,
added 22 cents, or 0.5%, to hit $ 41.29 a barrel on the New York Mercantile Exchange, despite concerns about rising inventories and geopolitics.
The 10-year Treasury note yields TMUBMUSD10Y,
it hung around the lowest levels since April 21 at 0.584%. Yields move in the opposite direction of prices.
In the currency markets, the dollar was down 0.3% lower in apathetic trading versus its top six rivals, as measured by the DXY index of the US dollar ICE,
.
