U.S. Stocks See Further Downside Amid Trade War Worries

(RTTNews) - After falling sharply early in the session, stocks regained some ground over the course of the trading day on Friday but remained firmly in negative territory. The major averages extended the steep drop seen over the two previous sessions, falling to their lowest closing levels in over a month.

While the major averages all closed in the red, the tech-heavy Nasdaq underperformed its counterparts, tumbling 107.05 points or 1.3 percent to 8,004.07. The Dow fell 98.41 points or 0.4 percent to 26,485.01 and the S&P 500 slid 21.51 points or 0.7 percent to 2,932.05.

For the week, the Nasdaq plunged by 3.9 percent, while the S&P 500 and the Dow plummeted by 3.1 percent and 2.6 percent, respectively.

Concerns about the outlook for the global economy continued to weigh on Wall Street after President Donald Trump announced plans to impose a 10 percent tariff on the remaining $300 billion worth of Chinese imports.

Trump revealed the plan shortly after U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin wrapped up the latest round of trade talks in Shanghai.

The president accused China of failing to follow through on pledges to buy large quantities of U.S. agricultural products and stop the sale of Fentanyl to the U.S.

The new tariffs announced by Trump represent the latest escalation in the trade war between the U.S. and China, which has been a dark cloud over the global economy for over a year.

In typical fashion, China responded to Trump's announcement by threatening to take necessary countermeasures to protect the country's interests.

Traders were also digesting a closely watched Labor Department report showing U.S. job growth slowed in the month of July but came in line with economist estimates.

The report said non-farm payroll employment climbed by 164,000 jobs in July after jumping by a downwardly revised 193,000 jobs in June.

Economists had expected employment to increase by 164,000 jobs compared to the spike of 224,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate held at 3.7 percent in July, unchanged from June and in line with economist estimates.

"Overall, this report won't be enough to move the needle much in either direction as far as a September rate cut is concerned, but it reinforces our sense that another move next month isn't yet as sure a thing as the markets are now pricing in," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

Sector News

Computer hardware stocks turned in some of the worst performances amid broad based weakness, with the NYSE Arca Computer Hardware Index plunging by 5.3 percent to its lowest closing level in well over a month.

NetApp (NTAP) led the sector lower, with the data storage company plummeting by 20.2 percent after warning of weaker than expected fiscal first quarter results.

Significant weakness was also visible among oil service stocks, as reflected by the 3.2 percent nosedive by the Philadelphia Oil Service Index. The continued weakness in the sector came despite a rebound by the price of crude oil.

Crude for September delivery jumped $1.71 to $55.66 a barrel after tumbling $4.63 to $53.95 a barrel in the previous session.

Networking, steel, telecom and chemical stocks also saw considerable weakness, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Friday. Japan's Nikkei 225 Index plunged by 2.1 percent, while China's Shanghai Composite Index tumbled by 1.4 percent.

The major European markets also saw significant weakness on the day. While the U.K.'s FTSE 100 Index slumped by 2.3 percent, the German DAX Index and the French CAC 40 Index plummeted by 3.1 percent and 3.6 percent, respectively.

In the bond market, treasuries extended the substantial upward move seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.9 basis points to 1.855 percent.

Looking Ahead

Following the slew of major economic events this past week, the economic calendar for next week is relatively sparse. Traders are still likely to keep an eye on reports on service sector activity and producer prices.

Disney (DIS), Tyson Foods (TSN), Avid Budget (CAR), Marriott (MAR), SeaWorld (SEAS), CVS Health (CVS), Office Depot (ODP), Wendy's (WEN), Viacom (VIAB), and Uber (UBER) are also among the companies due to report their quarterly results next week.