Written by Investing.com Staff, Investing.com
U.S. stocks lower at close of trade; Dow Jones Industrial Average down 1.41%
U.S. stocks were lower after the close on Friday, as losses in the Telecoms, Technology and Oil & Gas sectors led shares lower.
At the close in NYSE, the Dow Jones Industrial Average declined 1.41% to hit a new 3-months low, while the S&P 500 index fell 1.32%, and the NASDAQ Composite index lost 1.51%.
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The best performers of the session on the Dow Jones Industrial Average were McDonald’s Corporation (NYSE:MCD), which rose 0.10% or 0.19 points to trade at 198.27 at the close. Meanwhile, The Travelers Companies Inc (NYSE:TRV) fell 0.11% or 0.16 points to end at 145.57 and Walt Disney Company (NYSE:DIS) was down 0.12% or 0.16 points to 132.04 in late trade.
The worst performers of the session were Verizon Communications Inc (NYSE:VZ), which fell 4.36% or 2.48 points to trade at 54.35 at the close. Dow Inc (NYSE:DOW) declined 3.53% or 1.71 points to end at 46.76 and Cisco Systems Inc (NASDAQ:CSCO) was down 2.87% or 1.54 points to 52.03.
The top performers on the S&P 500 were Cooper Companies Inc (NYSE:COO) which rose 3.96% to 297.79, DISH Network Corporation (NASDAQ:DISH) which was up 3.88% to settle at 36.11 and Dollar Tree Inc (NASDAQ:DLTR) which gained 3.34% to close at 101.59.
The worst performers were Gap Inc (NYSE:GPS) which was down 9.32% to 18.68 in late trade, Sysco Corporation (NYSE:SYY) which lost 7.65% to settle at 68.82 andMattel Inc (NASDAQ:MAT) which was down 7.16% to 9.85 at the close.
The top performers on the NASDAQ Composite were DelMar Pharmaceuticals Inc (NASDAQ:DMPI) which rose 141.42% to 4.080, Stellar Biotechnologies Inc(NASDAQ:SBOT) which was up 62.50% to settle at 1.950 and AVEO PharmaceuticalsInc (NASDAQ:AVEO) which gained 29.63% to close at 0.8562.
The worst performers were Organovo Holdings Inc (NASDAQ:ONVO) which was down 31.35% to 0.553 in late trade, CytRx Corp (NASDAQ:CYTR) which lost 26.05% to settle at 0.380 and XBiotech Inc (NASDAQ:XBIT) which was down 20.70% to 7.20 at the close.
Falling stocks outnumbered advancing ones on the New York Stock Exchange by 2085 to 923 and 78 ended unchanged; on the Nasdaq Stock Exchange, 2035 fell and 648 advanced, while 73 ended unchanged.
Shares in Cooper Companies Inc (NYSE:COO) rose to all time highs; rising 3.96% or 11.35 to 297.79. Shares in Gap Inc (NYSE:GPS) fell to 52-week lows; losing 9.32% or 1.92 to 18.68. Shares in Dow Inc (NYSE:DOW) fell to 3-years lows; down 3.53% or 1.71 to 46.76.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 8.15% to 18.71.
Gold Futures for June delivery was up 1.43% or 18.40 to $1305.50 a troy ounce. Elsewhere in commodities trading, Crude oil for delivery in July fell 5.69% or 3.22 to hit $53.37 a barrel, while the August Brent oil contract fell 5.57% or 3.64 to trade at $61.69 a barrel.
EUR/USD was up 0.44% to 1.1179, while USD/JPY fell 1.19% to 108.30.
The US Dollar Index Futures was down 0.39% at 97.675.
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Canada stocks lower at close of trade; S&P/TSX Composite down 0.32%
U.K. stocks lower at close of trade; Investing.com United Kingdom 100 down 0.82%
Stocks – Wall Street Tumbles; Trump’s Mexico Tariffs up Toxic Trade Fears
The U.S. dollar fell, while the Mexican peso continued to slump, after U.S. President Donald Trump threatened to impose a 5% tariff on all Mexican goods if Mexico did not crack down on migration.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, lost 0.4% to 97.667 by 10:41 AM ET (14:41 GMT), while USD/MXN jumped 2.7% to a nearly five-month high of 19.6689.
Trump said via Twitter that he will impose the tariff on June 10 and that it will last and increase until illegal immigration is stopped.
Meanwhile, the greenback was also held back by data showing a rise in inflation, supporting the case for the Federal Reserve to keep interest rates unchanged.
The personal consumption expenditures (PCE) price index increased 0.3% last month, the biggest gain since January 2018. The core PCE rose 0.2%. Separate data showed that consumer spending is slowing after a temporary boost during the first quarter.
The dollar was lower against the safe-haven Japanese yen, with USD/JPY falling 0.9% to 108.61
Elsewhere, the euro surged on the weaker dollar, with EUR/USD up 0.4% to 1.1173, while cable rose 0.2% with GBP/USD at 1.2630
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What fears over China couldn’t achieve, worries over Mexico have done.
Bullion and futures of gold returned to the key bullish $1,300 mark on Friday as equity markets cratered and benchmark U.S. Treasury yields tumbled after President Donald Trump’s move to add Mexico to the U.S. list of trade adversaries.
Spot gold, reflective of trades in bullion, traded at $1,304.81 per ounce by 2:35 PM ET (18:35 GMT), up $16.34, or 1.3%. It hit a seven-week high of $1,307.02 earlier. For the whole of May, spot gold was up 1.7%.
Gold futures for June delivery, traded on the Comex division of the New York Mercantile Exchange, settled up $18.70, or 1.5%, at $1,305.80 per ounce. Comex’s more active August gold, the forthcoming front-month contract, also closed up $18.70, or 1.4%, at $1,311.10.
The Trump administration announced on Thursday it will impose a 5% tariff on all imported goods from Mexico beginning June 10 and “gradually increase” that tax to 25% until the flow of undocumented immigrants across the border stops. Trump later tweeted that stopping the flow of illegal drugs may also be a condition, while having companies move production to the U.S. to avoid tariffs was also part of the surprise plan.
The biggest trade war waged by the U.S. is, of course, with China with the more-than year-long showdown already threatening to push the world into a recession as neither side shows signs of blinking. Aside from the showdowns with China and Mexico, the Trump administration has also removed India – another giant economy with more than 1 billion consumers – from the U.S. Generalized System of Preferences, which gives favorable access to goods from developing countries.
While gold has been the safe haven of choice in times of political and economic troubles, where U.S.-China trade is concerned the yellow metal has faced much competition from the U.S. dollar. That has prevented gold from progressing past, or even staying in, $1,300 territory.
For a third day in a row, gold rose together with the U.S. dollar before the greenback eventually gave back its early gains. The dollar index, which measures the U.S. currency against a basket of six currencies, slid 0.4% to 97.708. For all of May, the dollar was up 0.5%.
“Gold finally reached the $1,300 area even with dollar strength as global growth is threatened by tariffs,” George Gero, precious metals analyst at RBC Wealth Management, said, citing “tariffs on car parts that come from Mexico, that could hurt future sales, with higher prices passed on to consumers” as the trigger for the move. Gero added:
“The Fed may be forced to look deeper into cutting rates instead of hiking.”
With worries about a potential global recession arising from Trump’s various trade wars, economists have been speculating again that the U.S. central bank may be forced into a new round of economic easing. Fed funds futures have priced in roughly two U.S. rate cuts by the start of next year as the yield curve between 3-month bills and 10-year notes remained inverted. Three-month treasurys were yielding 2.29% on Friday; the 10-year treasury yield was just 2.14% and is down 20% this year.
Inflation has been running below levels targeted by the Fed, placing Chairman Jerome Powell under the scrutiny of Trump again. Trump’s been pushing for lower interest rates. Powell said recently he believed the soft inflation environment “may wind up being transient.”
Elsewhere in metals, palladium fell after a four-day rally on worry over the Mexico tariffs, although the silvery-white auto-component metal retained its standing as the world’s costliest traded metal.
Spot palladium fell $35.25, or 2.6%, to $1,333.95 an ounce. It fell nearly 3.5% in May, its third-straight negative month, though it remains up 5% on the year.
Trades in other Comex metals as of 2:35 PM ET (18:45 GMT):
Palladium futures down $34.55, or 2.5%, at $1,331.15 per ounce.
Platinum futures down $1.00, or 0.1%, at $793.10 per ounce.
Silver futures up 7 cents, or 0.5%, at $14.56 per ounce.
Copper futures down 2 cents, or 0.7%, at $2.64 per pound.
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It’s macro in, micro out, as oil markets head for their worst monthly loss in six months amid trade wars that force investors to focus on a potential recession rather than the specifics of energy supply and demand.
West Texas Intermediate, the benchmark for U.S. crude, and U.K. Brent, the global gauge for oil, posted double-digit losses for May after Mexico became President Donald Trump’s latest target for tariffs for allegedly not doing enough to prevent illegal migration into the U.S.
WTI settled Friday’s trade down $3.09, or 5.5%, at $53.50 per barrel.
Brent lost $2.40, or 3.6%, for the session to settle at $64.47. The August Brent contract finished at $61.99, down 5.1%.
For the month, U.S. crude fell 16% while its U.K. peer lost 11%. Both benchmarks are still 18% and 20% higher, respectively, on the year.
But most importantly, in Friday’s trade WTI broke below the $55 per barrel level the first time since February, setting a 13-week low of $54.73. Brent had crashed under $65 for a 16-week low of $63.05.
On a more crucial technical level, both benchmarks broke below all key moving-day averages in the past week, including the lowest 5-day moving average. By dollar value alone, oil has lost about $11 on a barrel from a $22 gain accumulated since the Christmas Eve lows of last year, its bottom during the 2018 selloff. That’s a loss of exactly 50%, coming despite continued production cuts by OPEC.
OPEC-led production cuts, U.S. sanctions on Iran and Venezuela, along with disruptions in Nigeria or Russia all contributed to a 40% rally in the first four months of the year. But since May began, oil prices turned direction amid trade wars waged by the Trump administration.
On Thursday, the administration imposed a 5% tariff on all imported goods from Mexico beginning June 10 and said it has plans to “gradually increase” that tax to 25% until the flow of undocumented immigrants across the border stops. Trump later tweeted that stopping the flow of illegal drugs may also be a condition, while having companies move production to the U.S. to avoid tariffs was also part of the surprise plan.
The tax on Mexican imports could disrupt a long-standing cross-border energy trade, hitting U.S. refiners that use Mexican oil by boosting prices and raising concerns about potential retaliation by the world’s biggest buyer of U.S. energy products, Reuters reported.
Mexico sends 600,000 to 700,000 barrels of oil to the United States every day, mostly to refiners that process that crude into gasoline, diesel and other products. Mexico buys more than 1 million bpd of U.S. crude and fuel, more than any other country, and analysts are concerned that retaliatory tariffs from Mexico could disrupt that trade.
The biggest trade war waged by the U.S. is, of course, with China with the more-than year-long showdown already threatening to push the world into a recession as neither side has shown signs of blinking. Besides the showdowns with China and Mexico, the Trump administration has also removed India – another giant economy with more than 1 billion consumers – from the U.S. Generalized System of Preferences, which gives favorable access to goods from developing countries.
“’Screwed by Macro’ may deserve a place on my headstone as prices are cratering due to ‘trade fears’,” ICAP (LON:NXGN) energy futures broker Scott Shelton lamented in a note on Friday after he called on investors just a day earlier to go long on oil in anticipation of strong crude draw numbers in the U.S. Energy Information Administration’s weekly report released Thursday.
The EIA said in its regular weekly report that crude oil inventories decreased by just 0.28 million barrels in the week to May 24, compared to a forecast draw of 0.86 million barrels. In two previous weeks, it announced back-to-back builds of around 5 million barrels.
Oil bulls typically count on strong refinery runs and heavy gasoline consumption in the run-up to the summer. But refiners have been slow to draw down crude as profit margins for producing gasoline were running about 30% below year-ago levels.
Some suspect that one reason for Trump’s escalation of trade battles around the world was to rein in high oil prices after OPEC’s refusal to raise production lately. John Kilduff, founding partner at New York energy hedge fund Again Capital, said:
“Most interestingly, he hasn’t sent out a single tweet about oil for weeks now while carrying out all these, so you can’t even accuse him of intentionally suppressing the market. Oil bulls have no choice but to grit their teeth and see how far he goes.”
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Natural Gas No report this week
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