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U.S. Stocks Finish Volatile Session Mostly Lower

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Stocks showed wild swings over the course of the trading session on Friday before ending the day mostly lower. The major averages recovered from an initial move to the downside only to pull back sharply late in the session.

At the end of the day, the major averages were all firmly in negative territory. The Dow fell 98.68 points or 0.4 percent to 25,764.00, the Nasdaq slumped 81.76 points or 1 percent to 7,816.28 and the S&P 500 dropped 16.79 points or 0.6 percent to 2,859.53.

The major averages also closed lower for the week. The Nasdaq tumbled by 1.3 percent, while the Dow and the S&P 500 slid by 0.7 percent and 0.8 percent, respectively.

Reflecting recent market sensitivity to trade-related news, the late-day pullback came on the heels of a CNBC report indicating negotiations between the U.S. and China appear to have stalled.

Citing two sources briefed on the status of trade talks, CNBC said scheduling for the next round of negotiations is "in flux" because it is unclear what the two sides would discuss.

Sources told CNBC discussions regarding scheduling the next round of talks have not taken place since President Donald Trump signed an executive order ramping up scrutiny of Chinese telecom companies.

Lingering concerns about the escalating trade dispute between the U.S. and China also contributed to the initial weakness on Wall Street.

While Trump has sought to blame China for backing out of a nearly completed trade deal, a spokesperson for China's Ministry of Commerce claims the U.S. is responsible for serious setbacks in the trade talks.

Commerce Ministry spokesperson Gao Feng accused the Trump administration of "bullying behavior" with a recent increase in tariffs, according to state-run Chinese news agency Xinhua.

"It is regrettable that the U.S. side unilaterally escalated trade disputes, which resulted in severe negotiating setbacks," Gao said.

He added, "We urge the U.S. side to correct wrongdoings as soon as possible to avoid causing heavier damages to businesses and consumers in both countries and dragging down the global economy."

However, concerns about trade waned after the Trump administration officially delayed imposing tariffs on imported automobiles and parts for up to six months, confirming media reports from earlier this week.

A White House statement noted Trump has directed U.S. Trade Representative Robert Lighthizer to negotiate agreements to address the national security threat posed by auto imports.

On the U.S. economic front, the University of Michigan released a report showing a substantial improvement in consumer sentiment in May, although the data was recorded mostly before trade negotiations with China collapsed.

The preliminary report showed the consumer sentiment index surged up to 102.4 in May from 97.2 in April, reaching its highest level in fifteen years. Economists had expected the index to inch up to 97.5.

Sector News

Oil service stocks showed a substantial move to the downside over the course of the trading session, dragging the Philadelphia Oil Service Index down by 3.2 percent.

The sell-off by oil service stocks came amid a modest decrease by the price of crude oil, with crude for June delivery slipping $0.11 to $62.76 a barrel.

Significant weakness also emerged among semiconductor stocks, as reflected by the 2 percent slump by the Philadelphia Semiconductor Index.

Natural gas, oil producer, and networking stocks also saw considerable weakness on the day, notable strength was visible among computer hardware stocks.

Shares of Cray Inc. (CRAY) soared 22.5 percent after she supercomputer maker agreed to be acquired by Hewlett Packard Enterprise (HPE) for $1.3 billion in cash.

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 advanced by 0.9 percent, while China's Shanghai Composite Index plunged by 2.5 percent.

Meanwhile, the major European markets climbed off their worst levels but still closed lower. While the German DAX Index slid by 0.6 percent, the French CAC 40 Index dipped by 0.2 percent and the U.K.'s FTSE 100 Index edged down by 0.1 percent.

In the bond market, treasuries gave back ground after an initial jump but continued to see modest strength. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slipped by 1.2 basis points to 2.393 percent after hitting a low of 2.364 percent.

Looking Ahead

The economic calendar for next week is relatively light, although traders likely to keep an eye on reports on new and existing home sales and durable goods orders are as well as the minutes of the latest Federal Reserve meeting.

On the earnings front, Home Depot (HD), J.C. Penney (JCP), Toll Brothers (TOL), Lowe's (LOW), Target (TGT), NetApp (NTAP), Best Buy (BBY), and HP (HPQ) are among the companies due to report their quarterly results next week.

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