U.S. stocks closed lower Friday 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.
The comments made on Air Force One Friday morning overshadowed tenuous optimism in the stock market from a mostly healthy August jobs report. Uncertainty on the ramifications from escalating trade clashes and concerns about a downdraft in emerging economies have weighed on investors’ sentiment all week.
How did the major benchmarks fare?
The Dow Jones Industrial Average DJIA, -0.31% 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 SPX, -0.22% fell 6.37 points, or 0.2%, to 2,871.68 in bumpy action, while the Nasdaq Composite COMP, -0.25% 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%.
What drove the market?
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.
Earlier in the session, the market digested a jobs report that showed that 201,000 jobs were added in the month of August, slightly better than what had been expected by analysts. The unemployment rate held steady at 3.9% and wage growth showed signs of accelerating.
The technology sector, meanwhile, extended losses, falling 2.9% this week. Among the major decliners, Microsoft Corp. MSFT, -0.49% logged a weekly drop of 3.7%, while Google-parent Alphabet Inc. GOOGL, -0.54% GOOG, -0.56% slid 4.4%. Facebook Inc. FB, +0.31% was among the biggest losers, tumbling 7.2%.
What were market experts saying?
“I think investors were hopeful that we clearly made progress with Mexico [on trade] and Canada seemed to be within a line of sight…and I think investors were saying ‘Maybe we won’t get the fireworks with China and clearly there is disappointment, right now,” said Diane Jaffee, senior portfolio manager at TCW.
“With today’s jobs numbers, we’re back to our regularly scheduled program. July’s disappointment may have been an outlier as our economy is humming along at full speed,” wrote Mike Loewengart, vice president, investment strategy at E-Trade Financial Corp. “Strong jobs numbers plus continued strength from economic fundamentals, and a market coming off a winning streak all portend for a positive end to Q3,” he said.
“The interpretation of that [jobs report] is that inflation is potentially building up in the economy, driven by the wage growth,” said Ernesto Ramos, head of equities for BMO Global Asset Management.
“It’s the strength of the wage-growth number that’s driving us down today. I think this bakes in the idea of four rate hikes this year, which is not good for the market. Overall this gives a higher probability of more rate hikes over the coming year,” he told MarketWatch.
“The tech weakness and trade do concern me to a degree. You don’t have a good market if tech isn’t a leader, and there’s no doubt that tariffs and weakness in China could become a bigger concern if the issue starts to spill out over into the U.S. more,” said Wayne Kaufman, chief market analyst at Phoenix Financial Services.
What stocks were in focus?
Alibaba Group Holding Ltd. BABA, +1.56% shares rose 1.6% after the company announced a stock-buyback program.
Hedge-fund manager Daniel Loeb said Friday that he is planning to seek to replace the entire board at Campbell Soup Co.’s CPB, +0.42% coming annual shareholder meeting. The company’s shares were up 0.4%.
Oppenheimer analyst Noah Kaye started research coverage of Caterpillar Inc. CAT, -0.18% with a neutral rating, saying an upbeat outlook on management’s ability to mitigate earnings volatility is offset by valuation that is a bit rich. Shares of the industrials-equipment giant were down 0.2%.
Michaels Cos. MIK, +4.12% shares rose 4.1% after the company approved a stock-buyback program of $500 million.
Tesla Inc. TSLA, -6.30% shares sank 6.3% amid a series of unsettling developments at the company. The electric-car maker’s chief accounting officer, Dave Morton, resigned on Sept. 4, roughly a month after joining Tesla, according to a regulatory filing. Separately, Chief Executive Elon Musk appeared to smoke marijuana during an interview on “The Joe Rogan Experience” podcast.
Shares of Roku Inc. ROKU, +2.56% rose 2.6%, putting the media-streaming company on track to close at a record. The stock hit a fresh all-time high of $65.99 in Friday’s trade.
