US Stocks May Move Back to Upside in Early Trading

April 9, 2018
US Stocks report

By Investors Hub

The major U.S. index futures are pointing to a higher opening on Monday following the sell-off seen in the previous session.

Traders may look to pick up stocks at reduced levels despite lingering concerns about a potential trade war between the U.S. and China.

Stocks moved sharply lower over the course of the trading session on Friday, as trade war concerns once again resurfaced. After closing higher for three straight days, the major averages showed a substantial move back to the downside.

The major averages climbed off their worst levels going into the close but still ended the day firmly in the red. The Dow plummeted 572.46 points or 2.3 percent to 23,932.76, the Nasdaq dove 161.44 to 6,915.11 and the S&P 500 plunged 58.37 points or 2.2 percent to 2,604.47.

With the sharp pullback on the day, the major averages closed lower for the week. The Nasdaq tumbled by 2.1 percent, the S&P 500 slumped by 1.4 percent and the Dow slid by 0.7 percent.

The sell-off on Wall Street came amid renewed trade war concerns after President Donald Trump threatened to impose $100 billion of additional tariffs on Chinese imports.

Trump noted in a statement on Thursday that the U.S. Trade Representative recently announced $50 billion in proposed tariffs on imports from China over intellectual-property violations.

China retaliated by announcing plans to impose a 25 percent tariff on $50 billion worth of U.S. exports, including aircraft, cars, and soybeans, which Trump called an effort to harm U.S. farmers and manufacturers.

“In light of China’s unfair retaliation, I have instructed the USTR to consider whether $100 billion of additional tariffs would be appropriate under section 301 and, if so, to identify the products upon which to impose such tariffs,” Trump said.

He added, “I have also instructed the Secretary of Agriculture, with the support of other members of my Cabinet, to use his broad authority to implement a plan to protect our farmers and agricultural interests.”

Responding to the threat from Trump, the Chinese government declared it would retaliate to new tariffs “with force and without hesitation.”

Negative sentiment was also generated by a report from the Labor Department showing U.S. job growth slowed by much more than anticipated in the month of March.

The Labor Department said non-farm payroll employment rose by 103,000 jobs in March after spiking by an upwardly revised 326,000 jobs in February. Economists had expected an increase of about 193,000 jobs.

The report also said the unemployment rate came in at 4.1 percent in March, unchanged from the five previous months. The unemployment rate had been expected to edge down to 4.0 percent.

Meanwhile, the Labor Department said the annual rate of growth in average hourly employee earnings accelerated to 2.7 percent in March from 2.6 percent in February.

The major averages saw further downside as Federal Reserve Chairman Jerome Powell delivered remarks about the economic outlook at the Economic Club of Chicago.

Powell reiterated the belief that further gradual increases in interest rates will best promote the Fed’s goals of achieving maximum employment and stable prices.

Some traders had apparently been hoping Powell would signal a slower pace of rate hikes due to the recent volatility on Wall Street.

Biotechnology stocks turned in some of the market’s worst performances on the day, dragging the NYSE Arca Biotechnology Index down by 3.2 percent. With the steep drop, the index tumbled to its lowest closing level in well over three months.

Considerable weakness was also visible among semiconductor stocks, as reflected by the 3.1 percent loss posted by the Philadelphia Semiconductor Index. The index fell to a nearly two-month closing low.

The renewed trade war concerns also contributed to a sharp pullback by steel stocks, with the NYSE Arca Steel Index slumping by 3 percent after jumping by 2.8 percent on Thursday.

Transportation, financial, chemical, and energy stocks also moved notably lower, reflecting broad based weakness on Wall Street.

Dipo Olowookere

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan.

Mr Olowookere can be reached via [email protected]

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