Wall Street closed sharply lower on Thursday as investors wait on the sidelines for U.S. tariffs to be hiked on Chinese goods. Although trade negotiations continued between the United States and China, no sign of a breakthrough is visible as of now. All three major stock indexes finished in the red.
The Dow Jones Industrial Average (DJI) declined 0.5% or 138.97 points to close at 25,828.36. The S&P 500 shaded 0.3% to close at 2,870.72. Meanwhile, the Nasdaq Composite Index closed at 7,910.59, dropping 0.4%. The fear-gauge CBOE Volatility Index (VIX) decreased 1.6% to close at 19.10. A total of 7.75 billion shares were traded on Thursday, higher than the last 20-session average of 6.83 billion. Decliners outnumbered advancers on the NYSE by a 1.55-to-1 ratio. On Nasdaq, a 1.48-to-1 ratio favored declining issues.
How Did The Benchmarks Perform?
The Dow closed in negative territory with 21 components of the 30-stock blue-chip index closing in the red while nine finished in the green. The S&P 500 closed in the red for the fourth straight day.The Materials Select Sector SPDR (XLB) decreased 0.8%. Notably, nine out of eleven sectors of the benchmark index closed in the red while two finished in the green. Moreover, tech-heavy Nasdaq Composite also declined for the fourth consecutive day due to weak performance by trade-sensitive large-cap stocks.
No Development on Trade War Front
The U.S. government is all set to hike existing tariff rates to 25% from 10% on $200 billion Chinese goods at 12:01 AM EST on May 10. China's Commerce Ministry has also warned that it will pursue retaliatory actions. Moreover, Trump also threatened to impose 25% tariff on additional $325 billion of Chinese goods any time soon.
Meanwhile, a high-level Chinese delegation led by vice premier Liu He met top U.S. officials on Thursday. The meeting will also continue on Friday. On May 9, President Trump also said that he is hopeful of a possible trade deal with China this week. However, nothing concrete has emerged so far.
Notably, Chinese merchandize which left port for the United States before May 10 will not be subject to new tariff rates. This signifies that new tariffs will be effective only after a couple of weeks or so. Many industry experts have opined that this time period can be utilized by the two countries to reach a trade deal.
As the tariff war between the United States and China heightened, shares of trade-sensitive semiconductor stocks such as Intel Corp. INTC, NVIDIA Corp. NVDA and Qualcomm Inc. QCOM plummeted 5.3%, 2.1% and 0.9%, respectively. All three stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Department of Commerce reported that the number of people who applied for jobless benefits fell 2,000 to seasonally adjusted 228,000 for the week ended May 4. However, the number exceeded the consensus estimate was 218,000. The number of people already collecting unemployment benefits, popularly known as continuing claims, rose by 12,000 to 1.68 million.
The Bureau of Labor Statistics reported that producer price index (PPI) rose 0.2% in April, in line with the consensus estimate. Year over year, PPI increased 2.2%, remained flat with previous month’s figure. Year over year, the Core PPI (excluding food, energy and trade margins) increased 2.2% compared with 2% in March.
The Department of Commerce reported that the U.S. trade deficit for March rose to $50 billion from $49.4 billion in February. However, the figure was lower than the consensus estimate of a deficit of $51.3 billion. Imports increased 1.1% to $262 billion while exports moved up 1% to $212 billion. In the first quarter of 2019, total trade deficit came in at $150.4 billion compared with $156.3 billion in the prior-year quarter.
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