Trade Concerns May Continue to Weigh on US Stocks
By Investors Hub
The major U.S. index futures are pointing to a lower opening on Thursday, with stocks likely to extend the pullback seen over the course of the previous session.
The downward momentum on Wall Street may partly reflect concerns about the global economic impact on the ongoing trade dispute between the U.S. and other major economies.
Negative sentiment may also be generated in reaction to a Commerce Department report showing weaker than previously estimated U.S. economic growth in the first quarter.
After failing to sustain an early move to the upside, stocks turned lower over the course of the trading session on Wednesday. The major averages all pulled back off their best levels of the day and into negative territory.
The major averages ended the session just off their worst levels of the day. The Dow fell 165.52 points or 0.7 percent to 24,117.59, the Nasdaq plunged 116.54 points or 1.5 percent to 7,445.08 and the S&P 500 slid 23.43 points or 0.9 percent to 2,699.63.
Stocks initially benefited from news that President Donald Trump’s plan to crack down on Chinese investments in the U.S. is less harsh than feared.
Administration officials told reporters Trump wants to strengthen the Committee on Foreign Investment in the U.S. to prevent foreign companies from violating intellectual-property rights of American companies.
Trump expressed support for legislation that would expand CFIUS’ authority in a White House statement released Wednesday.
The president said the bill known as the Foreign Investment Risk Review Modernization Act would enhance the administration’s ability to protect the U.S. from new and evolving threats posed by foreign investment.
Trump argued the legislation would still sustain the strong, open investment environment to which the country is committed and which benefits the U.S. economy.
Reports earlier this week suggested Trump intended to use the International Emergency Economic Powers Act of 1977 to limit Chinese investment in the U.S.
However, technology stocks came under pressure over the course of the session, contributing to the steep drop by the Nasdaq.
In U.S. economic news, the Commerce Department released a report showing a smaller than expected decrease in new orders for U.S. manufactured durable goods in the month of May.
The Commerce Department said durable goods orders fell by 0.6 percent in May after tumbling by a revised 1.0 percent in April.
Economists had expected durable goods orders to drop by 1.0 percent compared to the 1.6 percent slump that had been reported for the previous month.
Excluding orders for transportation equipment, durable goods orders dipped by 0.3 percent in May after spiking by 1.9 percent in April. Ex-transportation orders had been expected to rise by 0.5 percent.
Meanwhile, a separate report from the National Association of Realtors showed an unexpected decrease in pending home sales in May.
NAR said its pending home sales index fell by 0.5 percent to 105.9 in May after slumping by 1.3 percent to 106.4 in April. Economists had expected pending home sales to climb by 0.5 percent.
Biotechnology stocks moved sharply lower over the course of the trading session, dragging the NYSE Arca Biotechnology Index down by 2.8 percent. With the drop, the index fell to its lowest closing level in over a month.
Substantial weakness also emerged among semiconductor stocks, as reflected by the 2.5 percent loss posted by the Philadelphia Semiconductor Index. The index also slid to its worst closing level in well over a month.
Financial, steel, gold and computer hardware stocks also came under pressure over the course of the session, contributing to the pullback by the broader markets.
On the other hand, significant strength remained visible among energy stocks, which moved higher along with the price of crude oil.
Reflecting the strength in the energy sector, the Philadelphia Oil Service Index surged up by 2.9 percent, while the NYSE Arca Natural Gas Index and the NYSE Arca Oil Index both climbed by 1.1 percent.