The main Wall Street indexes ended the week with a sharp decline after President Donald Trump raised concerns about US-China trade relations with the announcement of new tariffs. The investors’ attention was also focused on US employment data.
The blue-chip index Dow Jones Industrial Average ended the session with a decline of 98.41 points to a level of 26,485.01 points, after writing off 334.20 points earlier in the day. The broader S&P 500 lost 0.7% at the end of the day and reached a level of 2,932.05 points. The technology Nasdaq Composite declined by 1.3% and ended the session at 8,004.07 points. Core indexes fell below their 50-day average, which is a key technical level observed by traders.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was down 1.46% to 17.61.
During the week, the Wall Street stocks were hit hard. The S&P 500 and Nasdaq are down by 3.1% and 3.9%, respectively, which is their biggest weekly decline since the beginning of the year. The blue-chip index Dow Jones recorded its second-worst week of the year with a 2.6% decline.
In a series of tweets on Thursday, US President Donald Trump said he would impose a 10% duty on Chinese goods worth 300 billion USD. They will come into force on September 1. Trump later said he was ready for talks to repeal the levies if China increased purchases of US agricultural goods. Trump’s move put an end to a ceasefire in a long trade war between the world’s two largest economies, and investors worry that it will further disrupt global supply chains.
China’s foreign ministry has criticized Trump’s latest threats, saying the world’s largest economy must forget its illusions, take some responsibility and return to the right path to resolving the trade war.
Foreign Ministry spokeswoman told in a daily press conference that Beijing would take countermeasures if the US imposes new duties on Chinese imports.
Macroeconomically, the US economy added 164,000 jobs in July, just below the 165,000 projected by economics, bringing the US workforce to a record high.
Salaries, however, exceeded analysts’ expectations with a 3.2% year-on-year growth, beating the forecasts by 0.1 percentage point.
Strong wage figures may be seen by traders as a sign of rising inflation, which could keep the Federal Reserve from changing interest rates again this year. On Wednesday, the Fed cut its key rate by 25 basis points.
In bond markets, yields on 10-year and 30-year US Treasuries declined to 1.845% and 2.378%, respectively.
Corporate stocks performance
Caterpillar and Deere, which are closely related to commerce as they rely heavily on their overseas earnings, saw a decline of over 1.5%. The VanEck Vectors Semiconductor ETF is down by 1.4% amid Skyworks Solutions stock price decline of 4.2%.
Intel, Qualcomm and Advanced Micro Devices have all said that the trade spat between Washington and Beijing, as well as restrictions on doing business with Chinese tech giant Huawei, is weighing on their bottom lines and forecasts.
The stocks of Boeing gained 1.61% and the aircraft manufacturer was the best performing component within Dow Jones index.
Meanwhile, McDonald’s Corporation gained 1.52% and Merck & Company Inc was up by 0.93%.
Apple stocks followed Thursday’s 2.2% decline with another 2% drop on Friday, after Trump’s announcement of more tariffs on Chinese imports. Wedbush analyst Dan Ives estimated the trade dispute could lower fiscal 2020 earnings by 4% if Apple absorbs the price increases, or cut iPhone demand by 6 million to 8 million united if Apple passes on the costs to consumers.
Shares of Exxon Mobil fell by 1% after the energy giant reported second-quarter earnings that fell less than Wall Street had expected. Revenue also fell 6% year-over-year.
Chevron Corp reported a second-quarter profit that beat Wall Street expectations, while revenue growth came in below. The stock ended steady.
Burger King parent Restaurant Brands International Inc. QSR, +6.10% on Friday reported second-quarter profit and revenue that topped expectations and its stock rose 6%.
The top performers on the S&P 500 were Newell Brands Inc (+14.22%), Fortinet Inc (+8.90%) and Sealed Air Corporation (+7.70%), while on the flipside were NetApp Inc (-20.22%), Arista Networks (-10.21%) and LyondellBasell Industries NV (-6.60%).