Worries about trade tensions weigh on stocks
U.S. stocks bounced off lows but still ended weaker on Wednesday, 29 May 2019 as worries about trade tensions on top of global growth uncertainties spooked Wall Street, fueling buying in government bonds.
The Dow Jones Industrial Average sank 221.36 points, or 0.9%, to 25,126.41, but had fallen more than 400 points during the session. The S&P 500 index lost 19.37 points, or 0.7%, to 2,783.02 and the Nasdaq Composite Index dropped 60.04 points, or 0.8%, to 7,547.31.
U.S.-China trade tensions continue to weigh on stocks after Chinese state media reports underlined the country's scope to use rare-earth minerals, used in the production of an array of devices such as mobile phones, computer memory chips and rechargeable batteries, as an economic weapon.
Among stocks under focus, DowDuPont bounced back from earlier loss to rise 1% after the materials and chemicals company said that it expects to book noncash goodwill impairment charges of $800 million to $1.3 billion, following the 2017 merger of Dow Chemical Co. and E.I. du Pont de Nemours. Shares of Dick's Sporting Goods reversed direction to skid 5.9% after initially rising on better-than-expected first-quarter earnings while raising guidance for the rest of the year.
The U.S. Dollar Index continues to march forward, as it trades higher by 0.2% to 98.14. The greenback currently trades near its highs for the year.
Demand for U.S. Treasuries did lose traction during the afternoon, though, bringing yields slightly higher from session lows. The 2-yr yield finished four basis points lower at 2.08%, and the 10-yr yield finished three basis points lower at 2.23%.
Among economic data expected for the day, the weekly MBA Mortgage Applications Index declined 3.3% following a 2.4% increase in the prior week.
Crude prices ended lower at Nymex on Wednesday, 29 May 2019. Oil futures fell as risk-on markets, including benchmark U.S. stock indexes, declined, but Middle tensions and expectations for a weekly drop in U.S. crude supplies helped prices finish off the session's worst levels.
WTI crude declined 0.5% to $58.84/bbl. West Texas Intermediate crude for July delivery on the New York Mercantile Exchange fell 33 cents, or 0.6%, to settle at $58.81 a barrel after trading as low as $56.88. Front-month contract prices lost 6.8% last week as the contract hit its lowest level in more than two months. Front-month WTI was down nearly 8% for May so far.
Global benchmark July Brent fell 66 cents, or 0.9%, to $69.45 a barrel on ICE Futures Europe. It shed 4.9% last week, the worst weekly performance for a front-month contract this year. Front-month contract prices have lost almost 5% for the month to date.
Bullion prices ended higher at Comex on Wednesday, 29 May 2019.
Gold futures settled 0.3% higher at $1280.85/oz, and silver futures settled 0.6% higher at $14.41/oz. The day's modest advance in silver follows yesterday's drop, which saw the precious metal reach its lowest level since November.
Looking ahead, investors will receive Initial Claims, Continuing Claims, and Pending Home Sales data on Thursday along with the second estimate for Q1 GDP and advance reports for international trade in goods, retail inventories, and wholesale inventories for April.
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