US stocks and bond yields dip amid trade worries

Cornelia Mascio
Giugno 18, 2018

In late trading, the Dow Jones Industrial Average fell 55 points, or 0.2 percent, to 25,119. -China tariff tiff only to end the day higher.

The two countries have held several rounds of talks since early May but have yet to result in a deal, as the United States pressures China to narrow a $375 billion trade deficit.

The S&P 500 slid 2 points, or 0.08 percent, to 2,779.

Tariffs were not the only thing moving markets following a busy week full of encouraging reports on the United States economy and policy announcements from the world's biggest central banks.

The European Central Bank weighed in on Thursday to say it would end its bond-purchase program at year-end, even if any interest rate hike was still distant. It's making the moves because of the stronger economy, and that may mean something counterintuitive for the lay investor: The stronger the economy becomes, the more likely the Federal Reserve will be to raise interest rates quickly, and that would hurt stock prices. "The economy might actually feel good for the first time in a decade, but the problem is that those tend to be the periods at the end of the cycle".

Brent crude dropped more than $2 a barrel ahead of an OPEC meeting in Vienna next week as two of the world's biggest producers, Saudi Arabia and Russian Federation, indicated they were prepared to increase output. Crude sank amid speculation that oil-producing countries could push to increase production at next week's OPEC meeting. Brent crude, the global standard, lost 2.50 dollars to 73.44 dollars per barrel. That helped drag energy in the S&P 500 down 2.1 percent for the largest loss among the 11 sectors that make up the index.

The Dow is down 226.05 points, or 0.9 percent.

Investors are also weighing the impact of tightening monetary policy by central banks on the equities market.

Declining issues outnumbered advancers for a 1.63-to-1 ratio on the NYSE and for a 1.42-to-1 ratio on the Nasdaq. In Asia, South Korea's Kospi shed 0.8 percent, and the Hang Seng in Hong Kong fell 0.4 percent. Japan's Nikkei 225 index was an outlier and rose 0.5%.

Treasury yields fell for a second straight day, and the yield on the 10-year Treasury sank to 2.91% from 2.94% late Thursday.

Gold dropped 29.80 dollars to settle at 1,278.50 dollars per ounce, silver fell 78 cents to 16.48 dollars per ounce and copper lost eight cents to 3.14 dollars per pound.

Natural gas rose 6 cents to settle at $3.02 per 1,000 cubic feet, heating oil lost 7 cents to $2.09 per gallon and wholesale gasoline fell 7 cents to $2.02 per gallon.

NXP Semiconductors rose 1.8 per cent after a media report that Beijing had already approved Qualcomm Inc's proposed US$44 billion acquisition of the chipmaker.

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