Wall Street witnessed mixed trading on Friday following conflicting news on trade war front. Additionally, concerns about Eurozone’s future growth also dented investors’ confidence. While the S&P 500 and Nasdaq Composite ended in the green, the Dow finished in the red. However, for the week, all three major stock indexes gained marginally.
The Dow Jones Industrial Average (DJI) closed at 25,106.33, declining 0.3%. However, the S&P 500 Index (INX) increased 0.1% to close at 2,707.88. The Nasdaq Composite Index (IXIC) closed at 7,298.20, gaining 0.1%. A total of 6.83 billion shares were traded on Friday, lower than the last 20-session average of 7.46 billion shares. Decliners outnumbered advancers on the NYSE by 1.15-to-1 ratio. On the Nasdaq, decliners had an edge over advancers by 1.04-to-1 ratio. The CBOE VIX decreased 4% to close at 15.72.
How Did the Benchmarks Perform?
The Dow ended in negative territory for third straight-day for the first time since December 2018. Notably, 16 stocks of the 30-stocks blue-chip index finished in the green while fourteen ended in the red. The tech-heavy Nasdaq Composite finished in the green reversing its previous day’s loss, due to good performance by large-cap tech stocks.
The S&P 500 closed in positive territory after two straight-day of loss. The Communication Services Select Sector SPDR (XLC) declined 0.7% while Financials Select Sector SPDR (XLF) gained 0.5%. Notably, six out of 11 sectors of the benchmark index closed in the green while four ended in red and the remaining one finished unchanged.
Conflicting News on Trade War Front
On Feb 8, POLITICO reported that President Donald Trump is likely to sign an executive order next week banning Chinese telecom equipment from being used in U.S. wireless networks.Trump administration’s plan to issue the directive is part of its core principles to protect the United States from external cyber threat, especially from China.On Feb 7, President Trump said that he would not meet with the Chinese president Xi Jinping before Mar 1.
On the other hand, White House stated that U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will lead a principal-level delegation to Beijing for meetings with Chinese counterparts on Feb. 14-15. Notably, the two countries are currently going through a 90-day truce period during which they will refrain from imposing fresh tariffs on each other. The deadline will come to an end on Mar 1.
Eurozone Growth Concerns
On Feb 6, the European Commission lowered 2019 growth projection for the 19-member Eurozone from 1.9% in November to 1.3%. The growth rate for 2020 was pegged at 1.6%. The EC cited weaker demand for its exports from China and geopolitical issues related to Brexit as the primary reasons behind lowering growth rate. Moreover, both Germany and Italy, the two largest economies of the Eurozone, are likely to face several headwinds in 2019.
On Feb 7, the Federal Statistical Office of Germany reported that the country’s industrial output--comprised of output in manufacturing, energy and construction--fell 0.4% in December, reflecting four consecutive months of decline. Year over year industrial output declined 3.9%.
Moreover, Italy is on a collision with the European Union over fiscal discipline issues. Italy’s manufacturing sector shrank for a third straight month in December. IHS Markit’s gauge of factory activity came in at 49.2 for December. Additionally, Bank of England reduced the growth rate of the UK for 2019 to 1.2% from 1.7% forecasted earlier.
Consequently, shares of BT Group plc BT and Eni S.p.A. E declined 0.4% and 0.3%, respectively. BT Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For the week as a whole, all three major stock indexes finished in the green. The Dow rose nearly 0.2%. The S&P 500 and Nasdaq Composite gained 0.1% and 0.5%, respectively. While The Dow and Nasdaq Composite recorded seventh straight weekly gains, the S&P 500 posted six weekly gains out of last seven weeks. Last week, Wall Street rally was buoyed by strong fourth quarter earnings results especially for the tech sector, partially offset by trade war and global growth concerns.
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