Stocks slip amidst job report and tariff comments
U.S. stocks closed lower on Friday, 07 September 2018 to retreat for the week after President Donald Trump said the U.S. had tariffs ready to go on another $267 billion in Chinese goods, on top of tariffs on $200 billion in goods the administration is now preparing. Friday's drop marks the S&P 500 and the Nasdaq's fourth straight decline. Uncertainty on the ramifications from escalating trade clashes and concerns about a downdraft in emerging economies have weighed on investors' sentiment all week.
The Dow Jones Industrial Average bounced back from its intraday low to end 79.33 points lower at 25,916.54, a loss of 0.3% The S&P 500 index fell 6.37 points, or 0.2%, to 2,871.68 in bumpy action, while the Nasdaq Composite slid 20.18 points, or 0.3%, to 7,902.54.
For the week, the Dow edged down 0.2%, the S&P 500 shed 1%, and the Nasdaq slumped 2.6%.
Trump's comments about tariffs come as investors focused on the developments surrounding international trade after it was reported that the prospect of resolving the U.S. trade battle with China was fading. At the same time, investors continue to monitor talks between the U.S. and Canada amid an effort to revamp the North American Free Trade Agreement.
Equity futures dipped lower following the release, but the market didn't stay down for long. 10 of 11 S&P sectors finished in negative territory, with health care being the lone exception. The lightly-weighted utilities and real estate spaces were the worst performers, but losses were modest in general.
The Labor Department reported on Friday that the U.S. created 201,000 new jobs in August, keeping the unemployment rate at an 18-year low of 3.9%. Market had forecast a 200,000 increase in new nonfarm jobs. The yearly rate of pay increases also climbed to 2.9% from 2.7%, marking the highest level since June 2009. The data came in much higher than market expectations and the major takeaway has been the rise in wage growth that will further strengthen the case for two more rate increases in this year.
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The strong jobs report is seen as supporting the Federal Reserve's intention to hike rates at least once more in September, which already is expected, and possibly once more in December. The policy-setting Federal Open Market Committee is slated to convene its two-day gathering on Sept. 26.
Higher rates can hurt the appeal of gold and strengthen the U.S. dollar, which can make assets priced in the currency more expensive to buyers using other currencies.
The ICE U.S. Dollar Index, a popular measure of the buck's strength against a basket of six rivals, has gained 3.6% so far this year, creating a headwind for dollar-pegged commodities. It traded up 0.4% on Friday, poised for a weekly rise of 0.3%.
Bullion prices ended lower on Friday, 07 September 2018 at Comex. Gold futures ended lower on Friday, building on a loss for the week, as strong U.S. jobs data provided a boost to the dollar and supported expectations for further interest-rate hikes this year.
December gold fell $3.90, or 0.3%, to settle at $1,200.40 an ounce, with the precious metal logging a weekly decline of about 0.5%. Futures prices have now posted weekly declines in eight out of nine weeks. December silver fell nearly 0.1% to $14.17 an ounce, for a weekly loss of 2.7%.
U.S. benchmark oil futures saw a modest decline on Friday, 07 Setember 2018 booking a loss of nearly 3% for the week, the first weekly loss since mid August. Concerns over the potential for weaker energy demand on the back of global trade tensions pressured prices, but expectations for tighter supplies as U.S. oil sanctions on Iran go into effect later this year provided some support.
October West Texas Intermediate crude, the U.S. oil benchmark, fell 2 cents to settle at $67.75 a barrel on the New York Mercantile Exchange. The contract marked a 2.9% weekly loss, after two consecutive weeks of gains.
November Brent, the global benchmark, however, tacked on 33 cents, or 0.4%, to settle $76.83 a barrel on the ICE Futures Europe exchange, marking a reversal from earlier declines that sent prices to an intraday low of $75.88. It settled down 1% for the week.
In other corporate news, electric automaker Tesla tumbled 6.3%, hitting a five-month low, after its Chief Accounting Officer announced his resignation after just a month with the company and following headlines that its Chief People Officer will not be returning from her leave.
Looking at other markets, U.S. Treasuries sold off on Friday after the release of the August jobs report, sending yields higher across the curve. The yield on the Fed-sensitive 2-yr note jumped six basis points to 2.69%, and the yield on the benchmark 10-yr note also rose six basis points, closing at 2.94%.
Looking ahead, investors will receive just one economic report, the Consumer Credit report for July, on Monday.
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