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U.S. Stocks Close Notably Lower Following Failed Recovery Attempt

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After coming under pressure in morning trading on Friday, stocks staged a recovery attempt in the afternoon but still ended the day notably lower. With the pullback on the day, the major averages partly offset the strong gains posted on Thursday.

While the Dow briefly peeked above the unchanged line, the blue chip index ended the day down 90.75 points or 0.3 percent to 26,287.44. The Nasdaq slumped 80.02 points or 1 percent to 7,959.14 and the S&P 500 slid 19.44 points or 0.7 percent to 2,918.65.

The major averages regained some ground following the sell-off seen on Monday but still closed lower for the week. The Dow fell by 0.7 percent, while the Nasdaq and the S&P 500 dropped by 0.6 percent and 0.5 percent, respectively.

The weakness on Wall Street came after President Donald Trump told reporters the U.S. is "not going to do business" with Chinese tech giant Huawei.

"And I really made the decision. It's much simpler not doing any business with Huawei," Trump said. "That doesn't mean we won't agree to something if and when we make a trade deal."

Trump also indicated he is "not ready" to make a trade deal with China, suggesting the U.S. could skip the next round of trade talks in September.

"We'll see whether or not we keep our meeting in September," Trump said. "If we do, that's fine. If we don't, that's fine."

The comments from Trump came after a report from Bloomberg said his administration is holding off on decisions about licenses for U.S. companies to restart business with 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 weighed 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."

Sector News

Steel stocks showed a substantial move to the downside amid concerns about the U.S.-China trade war, dragging the NYSE Arca Steel Index down by 3.3 percent. The index ended the session at its lowest closing level in almost three years.

Significant weakness also emerged among oil service stocks, with the Philadelphia Oil Service Index plunging by 3.1 percent to an eighteen-year closing low.

The sell-off by oil service stocks came amid a sharp drop by the price of crude oil, as crude for September delivery plunged $1.96 to $54.50 a barrel.

Tobacco, semiconductor, and biotechnology stocks also saw considerable weakness on the day, moving lower along with most of the other major sectors.

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 rose by 0.4 percent, while China's Shanghai Composite Index slid by 0.7 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.4 percent, the French CAC 40 Index tumbled by 1.1 percent and the German DAX Index slumped by 1.3 percent.

In the bond market, treasuries pulled back into negative territory after moving modestly higher early in the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, ticked up by 1.8 basis points to 1.734 percent after hitting a low of 1.680 percent.

Looking Ahead

The economic calendar for next week starts off relatively quiet but ramps up with the release of closely watched reports on consumer prices, retail sales, industrial production, and housing starts.

On the earnings front, Macy's (M), Cisco Systems (CSCO), and Walmart (WMT) are among the companies due to report their quarterly results next week.

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