Plus   Neg

U.S. Stocks Pulling Back On Renewed Trade War Worries


Stocks have moved mostly lower in morning trading on Friday, giving back ground following the rally seen over the course of the previous session. The major averages have slid firmly into negative territory, with the Nasdaq and the S&P 500 pulling back below the unchanged line for the week.

The major averages have seen further downside in recent trading, hitting new lows for the session. The Dow is down 178.79 points or 0.7 percent at 26,199.40, the Nasdaq is down 79.52 points or 1 percent at 7,959.64 and the S&P 500 is down 23.97 points or 0.8 percent at 2,914.12.

The pullback on Wall Street comes amid renewed concerns about the U.S.-China trade war after a report from Bloomberg said President Donald Trump's administration is holding off on decisions about licenses for U.S. companies to restart business with Chinese tech giant Huawei.

Trump previously said his administration would make "timely licensing decisions" but has reportedly decided to delay the decisions in response to China halting its purchases of U.S. agricultural products.

China decided to stop buying U.S. agricultural products in retaliation against Trump's announcement last week that he plans to impose a 10 percent tariff on the remaining $300 billion worth of Chinese imports.

The report is weighing on U.S. chipmakers, which require a special license to sell goods to Huawei after the company was added to a U.S. trade blacklist in May over national security concerns.

In U.S. economic news, the Labor Department released a report showing a modest increase in producer prices in the month of July.

The Labor Department said its producer price index for final demand rose by 0.2 percent in July after inching up by 0.1 percent in both May and June. The uptick in prices matched economist estimates.

Meanwhile, the report said core producer prices, which exclude food and energy prices, edged down by 0.1 percent in July after climbing by 0.3 percent in June.

The modest pullback in core producer prices came as a surprise to economists, who had expected core prices to rise by 0.2 percent.

"The decline in core producer prices in July confirms that underlying price pressures remain subdued," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, "At the margin, that makes it a little more likely that Fed officials will react to any further signs of weakness in the real economy by cutting interest rates again."

Steel stocks have shown a substantial move to the downside amid concerns about the impact of the U.S.-China trade war, dragging the NYSE Arca Steel Index down by 2.4 percent.

Significant weakness has also emerged among semiconductor stocks, as reflected by the 1.8 percent drop by the Philadelphia Semiconductor Index.

Tobacco, biotechnology, and computer hardware stocks are also seeing notable weakness, moving lower along with most of the other major sectors.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index rose by 0.4 percent, while China's Shanghai Composite Index slid by 0.7 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the U.K.'s FTSE 100 Index has dipped by 0.3 percent, the French CAC 40 Index is down by 1 percent and the German DAX Index is down by 1.1 percent.

In the bond market, treasuries are rebounding following the pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.8 basis points at 1.698 percent.

For comments and feedback contact: editorial@rttnews.com

Follow RTT