Stock trimmed early gains Friday to trade mostly higher on the final trading day of August. Equities are on track for the best week since June, but are set to book the first losing month since May as the U.S.-China trade war escalated.
What are major indexes doing?
The Dow Jones Industrial Average YMU19, +0.14% was up 55 points, or 0.3%, at 26,415, while the S&P 500 index ESU19, -0.02% was up 2 points, or 0.1%, at 2,927. The Nasdaq Composite Index NQU19, -0.47% retreated 25 points, or 0.3%, to trade at 7,949.
For the week, the S&P is up 2.8%, while the Dow has gained 3.1% and the Nasdaq has rebounded 2.5% — on track for the biggest rise since the week ended June 7.
The major indexes are on track for their first losing month since May — and second losing month of 2019. The S&P 500 is on pace for a 1.8% decline, the Dow is set to fall 1.7% and the Nasdaq is down 2.8%. U.S. markets will be closed Monday for the Labor Day holiday.
Read: History says the stock market’s volatile August paves the way for more losses in September
What’s driving the market?
Stocks pared weekly gains Friday that were driven by Beijing and Washington appearing to adopt less strident tones on trade. China’s foreign ministry on Friday said U.S. and China negotiators were maintaining effective communication, Reuters reported.
Equities spent much of August under pressure as U.S.-China trade tensions escalated, with Washington and Beijing announcing escalating rounds of tariff increases, with some U.S. measures set to take effect on Sunday. Worries over the economic outlook rose, highlighted by a Treasury rally that sank yields and resulted in an inversion of the main measure of the U.S. yield curve, with the 10-year yield falling below the 2-year rate — a phenomenon viewed as an often reliable recession indicator.
For equities, much revolves around the difference between “tensions” and “escalation” on the trade front, said Jeff deGraaf, chairman and head of technical research at Renaissance Macro Research, in a Friday note.
“Trade tensions are fine to us as they provide a wall of worry. Trade escalation is more challenging because it forces a repricing of risk,” he said.
“If this is negotiating gamesmanship in search of the best ‘deal’ for the U.S economy and tax‐payers, we’re all for it…If trade escalation and tweets are just for sport, it will require a more permanent repricing of risk which will be seen in more persistent volatility and lower multiples,” he said.
On the data front, personal income in July rose 0.1% from June, below the 0.3% rise expected by economists polled by MarketWatch. Personal spending rose 0.6%, in line with the consensus. Core PCE inflation, the Fed’s preferred measures, rose 0.2% in July from the month prior, also in line with expectations. Year-over-year, consumer prices rose 1.4%, below the Fed’s target of 2%, potentially supporting calls for the central bank to lower interest rates at its September meeting.
The Federal Reserve’s Chicago-area purchasing managers index reading for August came in at 50.4, versus a 44.4 reading in July. The University of Michigan’s revised index of consumer sentiment printed at 89.8, versus an initial reading of 92.1 and below the 98.4 reading in July.
Which stocks are in focus?
Shares of Dell Technology Inc. DELL, +6.81% were up 7.1%. After Thursday’s closing bell, it reported second-quarter results that topped Wall Street estimates.
Tesla Inc.’s TSLA, +1.55% stock rose 1.8%, after a Reuters report that China will exempt 16 of the electric-car company’s models from a new purchase tax.
American Outdoor Brands Corp. AOBC, -19.08% late Thursday reported quarterly results and delivered an outlook that disappointed investors. Shares fell 17.8%.
Shares of Ulta Beauty Inc. ULTA, -29.39% were down 29.6%, after the cosmetics retailer reported disappointing second-quarter results Thursday evening.
Shares of Marvell Technology Group Ltd. MRVL, -0.60% were down 0.4% after the chip maker reported second-quarter results late Thursday that exceeded Wall Street estimates, but offered weak third-quarter guidance tied to the U.S. government’s export restrictions regarding Chinese telecom giant Huawei Technologies Co.
Shares of Big Lots Inc. BIG, +2.04% were 4.1% higher after delivering second-quarter results.
Campbell Soup Co. CPB, +7.58% stock rose 8%, after reporting better-than-expected fiscal fourth-quarter earnings.
How are other markets trading?
The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +1.85% was up 0.7 basis point at 1.523%.
In commodities markets, the price of crude oil CLV19, -2.61% fell 2.7%l, while the price of gold GCZ19, -0.23% was off around 0.3%. The ICE U.S. Dollar Index DXY, +0.33%, a measure of the U.S. currency against a basket of six major rivals, rose 0.3%.
In Asia, equities were mostly higher, as the China CSI 300 000300, +0.25% rose 0.3%, Japan’s Nikkei 225 NIK, +1.19% added 1.2% and Hong Kong’s Hang Seng HSI, +0.08% advanced 0.1%. European stocks closed higher, with the Stoxx Europe SXXP, +0.73% up 0.6%.
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