Day Traders Diary
Stocks snapped a four-session winning streak on Wednesday as U.S.-China trade tensions retook center stage and as crude oil prices tumbled, weighing on energy shares. The S&P 500 dropped 0.7% to 2774, the Dow Jones Industrial Average declined 0.9% to 24700, and the Nasdaq Composite slid 0.6% to 7717.
The White House further escalated its ongoing trade dispute with Beijing on Tuesday evening, publishing a new list of tariffs. This round of duties is the largest yet, calling for a 10% tariff on $200 billion worth of Chinese goods, but it won't be official for at least two months. As it did with earlier tariffs, China promised to retaliate.
Meanwhile, in Brussels, a two-day NATO summit got off to a contentious start after President Trump criticized Germany for approving a major gas deal with Russia. NATO leaders later recommitted to a military spending target of 2% of GDP by 2024 at the urging of Mr. Trump, who was pushing for doubling the target to 4%.
Back on the home front, energy stocks tumbled as crude prices retreated from a three-and-a-half year high. Several factors contributed to the crude sell off, including a muted/negative response to a bullish inventory report, which showed a huge drop of 12.6 million barrels -- the biggest weekly drop since September 2016. WTI crude futures tumbled 5.0% to $70.38 per barrel, and the S&P 500's energy sector declined by 2.2%, closing at the bottom of the sector standings.
The industrials (-1.6%) and materials (-1.7%) spaces, both of which are sensitive to trade issues, were the next-worst performing groups, while most other spaces lost no more than 0.8%. Out of 11 groups, the utilities space (+0.9%) was the only one to finish in the green, continuing to rebound from Monday's 3.1% drop.
On the corporate front, shares of 21st Century Fox (FOXA 47.79, -1.98) lost 4.0% following reports that Comcast (CMCSA 33.77, +0.43) may forego countering Disney's (DIS 108.04, +2.01) offer for Fox's entertainment assets and focus on upping its bid for British media company Sky instead. Meanwhile, airlines tumbled after American Airlines (AAL 35.96, -3.16) issued a revenue growth warning; AAL shares ended lower by 8.1%.
Elsewhere, U.S. Treasuries finished mostly higher, pushing yields lower; the benchmark 10-yr yield dropped three basis points to 2.84%. The U.S. Dollar Index rallied 0.7% to 94.48, and the CBOE Volatility Index jumped 7.8% to 13.63 after hitting a three-month low on Tuesday.
Reviewing Wednesday's economic data, which included the June Producer Price Index, May Wholesale Inventories, and the weekly MBA Mortgage Applications Index:
Looking ahead, investors will receive the June Consumer Price Index, the weekly Initial Claims report, and the June Treasury Budget on Thursday.
Headlines provided by Briefing.com