U.S. stocks closed in the red on Friday as investors’ remained concerned about the signing of a phase-one trade deal between the United States and China. All three major stock indexes ended in the red. Notably, Wall Street had a truncated trading session on last day on account of Black Friday. However, major stock indexes gained for both the week and month handsomely.
The Dow Jones Industrial Average (DJI) plunged 112.59 points or 0.4% to close at 28,051.41. The S&P 500 declined 0.4% to close at 3,140.98. Meanwhile, the Nasdaq Composite Index closed at 8,665.47, shedding 0.5%. The fear-gauge CBOE Volatility Index (VIX) increased 7.4% to close at 12.62. A total of 3.55 billion shares were traded Friday, lower than the last 20-session average of 6.88 billion. Decliners outnumbered advancers on the NYSE by a 1.86-to-1 ratio. On Nasdaq, a 1.35-to-1 ratio favored declining issues.
How Did The Benchmarks Perform?
The Dow closed in negative territory with 23 components of the 30-stock blue-chip index closing in the red while 7 ended in green. The tech-laden Nasdaq Composite ended in the negative territory due to poor performance of large-cap tech stocks. The Nasdaq’s loss was primarily owing to a 1.7% drop in the stock price of Dollar Tree Inc. DLTR. Dollar Tree carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The S&P 500 also finished in the red. The Energy Select Sector SPDR (XLE) lost 1%. Notably, all 11 sectors of the benchmark index closed in the red.
Concerns Over Phase-One Trade Deal
On Oct 11, President Donald Trump said that the two countries are very near to sign a phase-one trade deal. However, nothing concrete happened till the end of November, though both sides expressed their desire to reach an amicable solution soon.
On Nov 27, President Trump signed two bills supporting the Hong Kong protesters into law, despite China’s repeated objections.China threatened to retaliate and its foreign ministry said “It is a stark hegemonic practice & a severe interference in Hong Kong affairs, which are China’s internal affairs. China will take strong counter-measures.”
Notably, the phase-one deal needs to be signed by Dec 15, which the U.S. government set to impose new round of tariff on $160 billion of Chinese goods. Trump administration can also raise tariff rate on $250 billion of Chinses goods already under U.S. tariff. On Nov 29, Reuters reported thatthe U.S. government may expand its power to stop more foreign shipments of products with U.S. technology to China’s telecom giant Huawei Technologies.
Last week was a good one for U.S. stock markets. All three major stock indexes – the Dow, the S&P 500 and the Nasdaq Composite – gained 0.6%, 1% and 1.7%, respectively. Several favourable economic data for the U.S. economy and expectation of the signing of an interim trade deal are major drivers.
November marked the second best month for Wall Street after June so far in 2019. The Dow, the S&P 500 and the Nasdaq Composite --- rallied 3.7%, 3.4% and 4.5%, respectively. A fundamentally solid U.S. economy, a stable monetary stance adopted by the Fed after cutting benchmark interest rate by 75 basis-points in 2019 and heightened negotiations between the U.S. and Chinse officials to reach to a temporary trade deal boosted investors’ confidence on risky assets like equities.
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