US close: Markets weaker as trade concerns continue to build
Wall Street finished Thursday’s session weaker, as concerns about international trade weighed on markets, eBay and American Express disappointed with second-quarter numbers and another twist in the battle for control of 21st Century Fox.
The Dow Jones Industrial Average ended the day down 0.52% at 25,064.50, the S&P 500 was off 0.4% at 2,804.49, and the Nasdaq 100 was 0.51% lower at 7,352.36.
Concerns had been growing that a trade war could erupt between the European Union and the US.
EU officials were set to travel to Washington next week to discuss trade, but US president Donald Trump warned that the bloc faces “tremendous retribution” if the talks do not work out, with EU trade commissioners also saying they were drawing up their own naughty list of potential tariffs.
Trump said he believed that the EU’s 10% tariff on cars was unfair compared to America’s 2.5% tariff, but the EU would only be able to reduce its rate if it did so for all World Trade Organization members or agreed a wide-reaching bilateral accord with the US.
Washington had already imposed tariffs on a range of Chinese goods, prompting Beijing to respond with its own tariffs and a complaint to the WTO.
The two sides were reportedly continuing to discuss trade, but there were growing concerns that the talks had stalled.
“A transatlantic trade war stoked by Donald Trump poses the biggest threat to our modestly positive outlook for global growth and financial markets,” said Berenberg’s chief economist Holger Schmieding.
“His disdain for rules, allies and multilateral institutions sows uncertainty that is bad for business.”
Schmieding said he did not expect Trump to follow up on the worst of his threats, and was looking for businesses to get used to a “somewhat elevated” level of noise over time.
“However, if these assumptions are wrong, escalating trade wars could push financial markets into risk-off mode, resulting in a more subdued outlook for equities, lower bond yields and further safe haven flows into the US dollar.”
Adding to the economic picture was the key Philly Fed report, which provided a snapshot of American industry and was published before the opening bell.
It showed a mixed picture, with the main index shooting up to 25.7 in July, from 19.9 - well above forecasts of around 21.5, while new orders rocked from 17.9 to 31.4.
But Ian Shepherdson, chief economist at Pantheon Macroeconomics, pointed out that the data was not as strong as it initially looked.
“Such gyrations are not unusual.
“In contrast, the [Philly Fed’s] employment index, which tends to be much less volatile than new orders, dropped sharply to 16.8 from 30.4.”
Shepherson said that could be nothing more than noise, but a second straight soft number next month would be “disconcerting”.
Elsewhere, data from the US Labor Department showed that jobless claims dropped to 207,000 in the week ending 14 July, the lowest level since 1969 - though the 4 July holiday and the car industry’s annual retooling shutdowns were said to be making the numbers less predictable.
On the corporate front, IBM beat Wall Street expectations with both earnings and revenues., leading to a 3.32% surge in its share price.
Shares In eBay, which reported after close on Wednesday, plunged 10.12% on Thursday as the online marketplace missed analyst expectations for second-quarter revenues, and forecast underwhelming third-quarter numbers after a poor performance at its online ticket marketplace StubHub.
Also missing expectations was American Express, slipping 2.73% after it posted forecast-beating earnings but revenues fell short.
The biggest corporate story was Comcast’s bid for 21st Century Fox, with the US broadcaster and telecoms utility saying it was no longer pursuing Fox, and would instead focus on bidding for UK broadcaster Sky.
Last month, Fox agreed to sell its entertainment assets to Disney for $38 a share, with the assets including Sky, of which Fox owned 39%.
Last week Comcast upped its bid for Sky to £14.74 a share, trumping a sweetened £14 per share bid from Rupert Murdoch’s Fox for the 61% share in Sky it does not already own.
Shares in Comcast were up 2.56%, while 21st Century Fox slipped 0.06%.
Dow Jones - Risers
International Business Machines Corp. (IBM) $149.24 3.27%
Walt Disney Co. (DIS) $112.14 1.67%
Home Depot Inc. (HD) $202.63 0.83%
Apple Inc. (AAPL) $191.88 0.78%
Intel Corp. (INTC) $51.98 0.50%
Nike Inc. (NKE) $76.95 0.47%
Cisco Systems Inc. (CSCO) $42.40 0.45%
Caterpillar Inc. (CAT) $139.39 0.32%
Coca-Cola Co. (KO) $45.11 -0.02%
Chevron Corp. (CVX) $121.69 -0.18%
Dow Jones - Fallers
Travelers Company Inc. (TRV) $125.18 -3.71%
American Express Co. (AXP) $100.17 -2.73%
Walgreens Boots Alliance, Inc. (WBA) $64.93 -1.86%
JP Morgan Chase & Co. (JPM) $109.89 -1.47%
Johnson & Johnson (JNJ) $125.94 -1.46%
Dowdupont Inc. (DWDP) $66.10 -1.43%
Boeing Co. (BA) $355.48 -1.36%
Procter & Gamble Co. (PG) $78.74 -1.24%
United Technologies Corp. (UTX) $130.41 -1.01%
Unitedhealth Group Inc. (UNH) $252.95 -0.97%
S&P 500 - Risers
Snap On Inc. (SNA) $173.29 9.50%
Dover Corp. (DOV) $78.12 4.82%
Delta Airlines Inc. (DAL) $53.00 3.64%
Danaher Corp. (DHR) $103.20 3.64%
SCANA Corp. (SCG) $40.20 3.53%
Southwestern Energy Co. (SWN) $5.37 3.47%
Williams Companies Inc. (WMB) $28.69 3.35%
Macy's Inc. (M) $38.96 3.34%
Signet Jewelers Ltd (SIG) $60.65 3.32%
International Business Machines Corp. (IBM) $149.24 3.27%
S&P 500 - Fallers
Alcoa Corporation (AA) $41.56 -13.34%
eBay Inc. (EBAY) $34.11 -10.12%
Freeport-McMoRan Inc (FCX) $15.80 -7.49%
Fifth Third Bancorp (FITB) $28.31 -6.38%
Bank Of New York Mellon Corp. (BK) $52.73 -5.23%
AbbVie Inc (ABBV) $89.95 -4.71%
BB&T Corp. (BBT) $50.53 -4.64%
F5 Networks Inc. (FFIV) $171.69 -4.32%
Travelers Company Inc. (TRV) $125.18 -3.71%
Clorox Co. (CLX) $130.33 -3.47%
Nasdaq 100 - Risers
O'Reilly Automotive Inc. (ORLY) $299.23 3.00%
Ulta Salon, Cosmetics & Fragrance Inc. (ULTA) $257.41 2.70%
Comcast Corp. (CMCSA) $34.91 2.56%
DENTSPLY Sirona Inc. (XRAY) $45.34 2.49%
Idexx Laboratories Inc. (IDXX) $242.82 1.56%
Mercadolibre Inc. (MELI) $374.61 1.42%
Henry Schein Inc. (HSIC) $74.78 1.41%
Costco Wholesale Corp. (COST) $217.54 1.20%
Dollar Tree Inc (DLTR) $87.49 0.99%
QUALCOMM Inc. (QCOM) $59.31 0.94%
Nasdaq 100 - Fallers
eBay Inc. (EBAY) $34.11 -10.12%
Ctrip.Com International Ltd. Ads (CTRP) $42.12 -4.08%
Applied Materials Inc. (AMAT) $46.67 -3.33%
Netflix Inc. (NFLX) $364.23 -2.91%
Charter Communications Inc. (CHTR) $291.14 -2.82%
Baidu Inc. (BIDU) $262.42 -2.60%
Micron Technology Inc. (MU) $56.22 -2.14%
Liberty Global plc Series C (LBTYK) $27.05 -2.13%
Autodesk Inc. (ADSK) $134.50 -2.13%
Liberty Global plc Series A (LBTYA) $28.16 -1.92%