AP – Major United States (US) stock indexes ended little changed on Friday after a listless day of trading ahead of the Labor Day holiday weekend capped a solid week of gains for the market.
A late-afternoon flurry of buying gave the S&P 500 its third straight gain. The benchmark index also snapped a string of four consecutive weekly losses. Even so, the market closed out August with its second monthly decline this year, after May.
Financial, industrial and health care stocks were among the big winners. Those sectors outweighed losses in consumer goods makers and communication services stocks. Shares in companies that rely on consumer spending also fell.
The stock indexes wavered between small gains and losses through much of the day, with trading volumes lighter than usual.
“Going into a holiday weekend you just have three days here where you’re not going to be able to reposition, so people are probably taking some profits and squaring their books ahead of the weekend,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.
The S&P 500 edged up 1.88 points, or 0.1 per cent, to 2,926.46. The Dow Jones Industrial Average rose 41.03 points, or 0.2 per cent, to 26,403.28. The Nasdaq gave up an early gain, sliding 10.51 points, or 0.1 per cent, to7,962.88. The Russell 2000 index of smaller company stocks dropped 1.88 points, or 0.1 per cent, to 1,494.84.
The major indexes stemmed their August slide this week, but still ended the month with losses. The Dow dropped 1.7 per cent, the S&P 500 lost 1.8 per cent and the Nasdaq gave up 2.6 per cent. The Russell took the heaviest losses for the month, falling 5.1 per cent.
Trading turned volatile in August as investors worried that the escalating trade war between the US and China and a slowing global economy could tip the US into a recession. The bond market seemingly confirmed these fears when long-term bond yields fell below short-term ones, a so-called inversion in the US yield curve that has correctly predicted previous recessions.
“We found the limits of how far both the US and the Chinese side can push the trade issue until it actually starts to manifest itself in markets,” Samana said. “And where you probably saw the bulk of that reaction is in the fixed-income market. That’s why you saw long-term yields basically collapse.”
Bond prices initially fell on Friday, pushing yields higher, but then lost momentum. That pushed long-term bond yields further below short-term ones. The yield on the 10-year Treasury fell to 1.50 per cent from 1.51 per cent late Thursday. The two-year Treasury yield dropped to 1.51 per cent from 1.55 per cent the day before.
Washington and Beijing are deadlocked in talks over US complaints about China’s trade surplus and industrial plans, which its trading partners say are based on stealing or pressuring companies to hand over technology.
Last week, the trade conflict escalated again with both sides threatening new tariffs on each other’s goods, triggering a sharp sell-off in global markets.
Some of the Trump administration’s additional tariffs on Chinese products take effect Sunday and others on December 15. In addition, higher tariffs on a separate group of Chinese products are to take effect October 1.
Still, investors were encouraged by a Chinese government statement Thursday that its penalties on US products are adequate. That suggested Beijing might be pausing in the tit-for-tat cycle of tariff increases that has raised fears the global economy might tip into recession.
Negotiators meet next month in Washington after the latest round of talks in July in Shanghai produced no sign of progress.
Investors also weighed a mixed batch of corporate earnings reports on Friday.
Campbell Soup rose 3.9 per cent and Big Lots added 3.4 per cent. Both companies reported quarterly profits that easily beat analysts’ forecasts. Ulta Beauty plunged 29.6 per cent, it’s biggest drop ever, after the company reported weak results and cut its estimates.
Benchmark crude oil fell USD1.61 to settle at USD55.10 a barrel. Brent crude oil, the international standard, fell 65 cents to close at USD60.43 a barrel. Wholesale gasoline fell seven cents to USD1.61 per gallon. Heating oil declined three cents to USD1.83 per gallon. Natural gas fell one cent to USD2.29 per 1,000 cubic feet.
Gold fell USD7.40 to USD1519.10 per ounce, silver rose two cents to USD18.19 per ounce and copper fell three cents to USD2.53 per pound.
The dollar fell to JPY106.25 from JPY106.62 on Thursday. The euro weakened to USD1.0978 from USD1.1052.
US markets will be closed tomorrow for Labor Day.