Dow Industrials Fall for Fifth Straight Week -- Update
May 24 2019 - 6:13PM
Dow Jones News
By Corrie Driebusch and Paul J. Davies
The stalemate between the U.S. and China on a potential trade
deal dragged the Dow Jones Industrial Average lower for a fifth
consecutive week, its longest such losing streak since 2011.
Escalating rhetoric by politicians about the trade standoff and
higher tariffs sparked a broad retreat from companies that rely on
sales in China and those that buy supplies there.
Energy companies tumbled as the price of oil posted its worst
week of the year on worries about the economic impact of higher
tariffs. Meanwhile, investors sought the relative safety of U.S.
government bonds, pushing yields at one point to their lowest level
in more than a year and a half.
Earlier this month, analysts and traders said they were bracing
for a choppy period for U.S. stocks. That prediction has largely
played out. So far in May, the Dow industrials have fallen in 10
sessions, compared with eight sessions of gains. But the losses
have overshadowed the gains, and the blue-chip index has dropped
3.8% in May.
On Friday, the Dow industrials edged up 95.22 points, or 0.4%,
to 25585.69, and it ended the week down 0.7%. The S&P 500 added
3.82 points, or 0.1%, to 2826.06, but fell 1.2% for the week. The
Nasdaq Composite gained 8.72 points, or 0.1%, to 7637.01 and
finished the week 2.3% lower.
Friday represented a reprieve for all three indexes after steep
drops in the prior session. On Thursday, the Dow lost nearly 300
points, the same day the Federal Reserve Bank of New York warned
that tariffs imposed on Chinese imports were costing the average
household $813 a year.
The slight bounceback Friday illustrated that even as investors
have grown wary about the effects of the trade standoff on the U.S.
and other economies, they remain cautiously optimistic about the
future of corporate profits.
The U.S. economy is among the least dependent on international
trade, and the White House is confident that any damage to the
economy will be limited. according to Mark Haefele, global chief
investment officer at UBS Wealth Management.
When it serves his interest, President Trump takes tariffs off
as quickly as he puts them on, so things can change quickly," Mr.
Haefele said. "But we don't see the U.S. or China hurrying to reach
a deal, and the risk of miscalculation is growing."
Worries about economic growth slowing because of higher tariffs
hit oil prices hard Thursday, with U.S.-traded crude prices
dropping 5.7% for their biggest one-day drop this year. U.S.-traded
crude climbed 1.2% on Friday.
Government bond prices slipped and yields rose slightly Friday,
rowing back on a growing preference for safety that has pushed
yields generally lower all year. U.S. 10-year Treasury yields
climbed to 2.327% from 2.296% on Thursday, which was their lowest
level since 2017. Yields rise as prices fall.
In Europe, the British pound rose after a week of declines as
U.K. Prime Minister Theresa May announced Friday she would resign
to allow a new leader to try to break log-jammed efforts to agree
to a way to leave the European Union.
Global stock markets were rattled in recent trading sessions.
The Stoxx Europe 600 rose 0.6% on Friday, though it ended the week
down 1.5%. Germany's DAX was up Friday, but ended the week down
1.9%, hurt in part by Deutsche Bank, which slipped 2.4% on Thursday
to close at an all-time low.
In Asia, the Shanghai Composite fell for its fifth consecutive
week, while Hong Kong's Hang Seng and the Nikkei 225 declined for
their third straight weeks.
Write to Corrie Driebusch at corrie.driebusch@wsj.com and Paul
J. Davies at paul.davies@wsj.com
(END) Dow Jones Newswires
May 24, 2019 17:58 ET (21:58 GMT)
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