Stocks sell off amid trade tensions
U.S. stocks closed sharply lower Monday, 25 June 2018 with major indices seeing their biggest one-day drop in weeks and the Dow bearishly closing below a closely watched level for the first time in two years as fresh threats from President Donald Trump against U.S. trading partners underlined how the risk of protectionist policies has not left the market.
The Dow Jones Industrial Average tumbled 328.09 points, or 1.3%, to 24,252.80. The blue-chip average posted its biggest one-day drop since 29 May, and it closed at its lowest level since 4 May. While the S&P fell sharply on the day, it closed well off its lows of the session, and it rebounded above its 50-day moving average, which could indicate a level of support going forward.
The Nasdaq Composite Index declined 160.81 points, or 2.1%, to 7,532.01, its biggest one-day percentage loss since 6 April. The S&P 500 SPX, -1.37% fell 37.81 points, or 1.4%, to 2,717.07. The tech-heavy index struggled amid reports of new efforts to block Chinese investment in and sales to U.S. tech firms.
The day's losses were widespread, with 26 of the Dow's 30 components ending lower, along with nine of the 11 primary S&P 500 sectors. Tech was the biggest decliner of the day, however, dropping 2.3% in its biggest one-day decline since early April.
The day's losses were widespread, but technology stocks were among the most active of the day. Apple fell 1.5% while Alphabet ended down 2.6% and Facebook lost 2.7%. Microsoft Corp. fell 2%.
On Sunday, the People's Bank of China said it would reduce the amount of reserves banks are required to keep with the central bank, which would free up more than $100 billion for commercial banks to boost lending and restructure debt. Signs of a prolonged trade war took a toll on stocks last week, as investors grow increasingly concerned that the global economy could take a hit from those tensions.
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On a positive note, the countercyclical consumer staples and utilities sectors closed on Monday in the green. Within the consumer staples space, Campbell Soup surged 9.4% and Kraft Heinz added 0.2% following a NY Post report that Kraft might be interested in acquiring the soup maker.
The ICE U.S. Dollar Index which reflects the dollar's strength against a half-dozen rivals, was down 0.2% at 94.33, but was up 0.4% so far this month and up 2.4% for 2018 to date.
The 10-year Treasury note often used as a financial benchmark whose yield typically moves opposite of gold, has climbed since the start of June and traded lately just below 2.90%. As for stocks, the Dow DJIA, -1.33% marked its biggest weekly decline since March 23 through Friday and traded even lower on Monday.
Reviewing Monday's economic data, which was limited to the New Home Sales report for May, report showed that new Home Sales in May hit an annualized rate of 689,000, which is above the consensus of 666,000. The April reading was revised to 646,000 (from 662,000). The key takeaway from the report is that there wasn't any growth in new home sales outside the South region. That is the largest region for new home sales, though, and where there is a concentration of lower-priced housing markets, which helps explain the year-over-year drop in median and average selling prices.
Bullion prices ended lower at Comex on Monday, 25 June 2018 at Comex. Gold futures finished with a loss on Monday, with the precious metal marking another low year to date, even as the U.S. dollar, strong throughout the month, weakened against its currency rivals. A fresh round of global trade friction was again driving financial market sentiment on Monday, although the issue has had a subdued impact in supporting haven gold.
August gold fell $1.80, or 0.1%, to settle at $1,268.90 an ounce, its finish of 2018 so far. It shaved off 0.6% for last week despite an uptick during Friday's subdued session and was tracking a 2.8% June drop. September silver fell 0.8% to $16.407 an ounce.
Crude oil prices settled lower on Monday, 25 June 2018 with global benchmark Brent crude leading the decline, amid some uncertainty in the wake of an agreement by the Organization of the Petroleum Exporting Countries to ramp up production that was backed by nonmember Russia.
August West Texas Intermediate crude on the New York Mercantile Exchange gave up an earlier climb to lose 50 cents, or 0.7%, to settle at $68.08 a barrel, returning a small portion of Friday's 4.6% climb. August Brent crude fell 82 cents, or 1.1%, to $74.73 a barrel on the ICE Futures Europe exchange.
On Tuesday, investors will receive the Case-Shiller 20-City Index for April and the Conference Board's Consumer Confidence Index for June.
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