Cyclical assets slide on trade uncertainty
The blue-chip Dow Jones Industrial Average lost 0.7%, the tech-laden Nasdaq Composite lost 2.3%, and the small-cap Russell 2000 lost 1.4%.
The S&P 500 information technology (-2.8%) and the Philadelphia Semiconductor Index (-6.4%) underperformed on efforts to de-risk amid concerns that China could retaliate against U.S. tech companies. The S&P 500 energy sector lost 3.4%, as oil prices ($58.62/bbl, -$4.11, -6.6%) had their worst week in 2019. Concerns about global growth and end-demand contributed to the weakness in oil.
On the other hand, the defensive-oriented health care (+1.2%), utilities (+1.7%), and real estate (+0.3%) sectors outperformed.
It was a bit of a messy week leading up to these results, although a bit of good news did help tame selling interest.
Summing up the bad:
Summing up the good:
The takeaway is that the market appeared exhausted from the deluge of trade headlines that could swing from positive to negative on any given day. At the same time, the uncertainty in the outcome, and duration, of a trade dispute fed into concerns about economic growth and corporate earnings prospects.
U.S. Treasuries advanced in a flight for safety, driving yields lower in a curve-flattening trade. The 2-yr yield dropped eight basis points to 2.16%, and the 10-yr yield dropped 14 basis points to 2.32%. The U.S. Dollar Index declined 0.4% to 97.58.
Earnings reports were retail-heavy this week. Home Depot (HD), Target (TGT), TJX Companies (TJX), L Brands (LB), and AutoZone (AZO) advanced following their results. Kohl's (KSS), Lowe's (LOW), Nordstrom (JWN), Urban Outfitters (URBN), Foot Locker (FL), and Best Buy (BBY) all dropped sharply following their results/guidance.
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2019-80414 (Exp 09/19)