U.S. Stocks Slip at End of Big Week
August 07 2020 - 10:25AM
Dow Jones News
By Anna Isaac and Gunjan Banerji
U.S. stocks wavered Friday as the latest employment report
showed the economy added more jobs than expected last month, though
uncertainty surrounding fresh government stimulus threatened to
crimp a recovery.
Employers added 1.8 million jobs in July and the unemployment
rate fell to 10.2%, according to the Labor Department. Economists
surveyed by The Wall Street Journal had projected that payrolls
grew by 1.5 million and that the unemployment rate dropped to 10.6%
from 11.1% in June.
Investors have also been closely monitoring negotiations among
lawmakers regarding fresh government stimulus, after $600 in
enhanced weekly unemployment benefits expired, endangering consumer
spending and an economic recovery.
So far, talks between White House officials and Democratic
leaders on a new coronavirus-aid package ended late Thursday
without a breakthrough as both sides edged closer to the Trump
administration's Friday deadline for reaching a deal or leaving the
bargaining table.
Fiscal stimulus has been a key driver in the stock market's
dramatic recovery since its March lows, and worries that lawmakers
wouldn't reach a consensus weighed on markets early Friday,
analysts said.
The S&P 500 fell about 0.1% shortly after the opening bell.
The Dow Jones Industrial Average lost about 80 points, or 0.3%. The
Nasdaq Composite shed 0.1%.
Despite Friday's losses, all three major indexes are on track to
end the week up at least 2%.
July's job growth followed May and June's combined payroll gain
of 7.5 million as many states lifted lockdown restrictions on
businesses. There are now about 13 million fewer jobs than in
February, the month before the coronavirus hit the U.S.
economy.
"It shows we're going in the right direction but we're still
nowhere close to where we were in February," said Shawn Cruz,
senior markets strategist at TD Ameritrade, of the monthly jobs
report.
Also hanging in the backdrop are tensions between the U.S. and
China. President Trump signed executive orders Thursday night that
would bar people in the U.S. or subject to U.S. jurisdiction from
transactions with the China-based owners of WeChat and TikTok,
effective 45 days from Thursday. That essentially imposes a 45-day
deadline for an American company to purchase TikTok's U.S.
operations. The orders are likely to be viewed in China as an
attempt to stifle the nation's technology sector.
The orders come as relations deteriorate between the two
countries, prompting speculation that trade among the world's two
largest economies could take a hit.
"China is just about the only bipartisan issue in Washington at
the moment," said James Athey, senior investment manager at
Aberdeen Standard Investments. "The framework of a Cold War,
decoupling and a bi-polar world is the right one to think about. It
won't be possible to straddle both China's and the U.S.'s
agenda."
Shares of Tencent Holdings plunged as much as 10% on Friday in
Hong Kong, hours after Mr. Trump signed the order targeting its
WeChat app. Analysts who follow Tencent were scrambling to figure
out how much of the company's business could be affected.
In another sign of the deepening rift, Chinese companies with
shares traded on U.S. stock exchanges would be forced to give up
their listings unless they comply with U.S. audit requirements
under a plan recommended Thursday by the Trump administration.
In Asia, major markets fell. The Shanghai Composite dropped
almost 1%, while Hong Kong's Hang Seng Index fell nearly 1.6% and
Japan's Nikkei 225 index dropped 0.4%.
Shares of Uber Technologies fell 4.5% after the company posted
another big loss after market close Thursday, with little sign of
recovery in its core ride-hailing business as the pandemic drags
on.
Overseas, the Turkish lira rose 0.7% against the dollar after
hitting its weakest ever closing level Thursday. Officials from the
central bank and the Turkish banking watchdog held an hourslong
meeting with top executives from the country's main banks late
Thursday evening to discuss recent market developments.
"The situation in Turkey is getting worse and may feed negative
spillovers," Mr. Hardman said. "There's potential there that could
push the dollar higher against the euro. The euro's more exposed to
a negative shock in Turkey, as we saw in 2018."
The yield on the benchmark 10-year U.S. Treasury note ticked
down to 0.526%, from 0.535% Thursday. Yields fall as bond prices
rise.
Write to Anna Isaac at anna.isaac@wsj.com and Gunjan Banerji at
Gunjan.Banerji@wsj.com
(END) Dow Jones Newswires
August 07, 2020 10:10 ET (14:10 GMT)
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