- The Dow Jones rallied back from losses of more than 300 points.
- Donald Trump’s rhetoric is growing hawkish on China, but a closely-watched press conference proved to be a nothingburger
- The Dow closed flat, while the S&P 500 and Nasdaq recovered into the green.
The Dow Jones closed slightly lower on Friday, but the stock market bellwether was heading for far heftier losses when President Donald Trump took the podium this afternoon.
His highly-touted press conference turned out to be a whole lot of nothing, but that’s exactly what a nervous Wall Street was hoping to hear.
Dow Rallies Off Its Lows as Trump Rhetoric Fails to Spark Hawkish Policy
The Dow closed the session with losses of just 17.53 points or 0.07%, ending the month at 25,383.11.
The S&P 500 and Nasdaq managed to bounce back into the green, rising 0.48% and 1.29%, respectively.
At one point on Friday afternoon, the Dow was down more than 350 points, and it came within inches of diving back below 25,000.
But Wall Street quickly realized that Trump’s “big announcement” was a long-expected halt to funding for the World Health Organization (WHO).
The president also previewed that the White House would halt preferential treatment for Hong Kong, but this was nothing new. Nor did he provide any details, suggesting no policy shift is imminent.
Still, it’s clear that Trump is growing increasingly irritated with China.
Beijing’s supposed culpability for the pandemic and its intrusion into Hong Kong have strained the relationship. Behind the scenes, it is obvious there are even more reasons for the breakdown between Beijing and the White House.
According to a Bloomberg report, Chinese purchases of U.S. agricultural products have plunged to levels not seen since 2007. This appears to be the result of market forces rather than political ones. A collapse in Brazil’s real has made their soybeans much more attractive to Chinese buyers.
Regardless, the news is a terrible blow to the “Phase One” trade deal, even if Trump has declined to formally scrap it.
May Jobs Report Awaited Next Week
Michigan consumer sentiment missed estimates, and personal spending fell worse than anticipated as the savings rate spiked to record levels.
The big question for the stock market is whether there will be an explosion of pent-up demand when economic activity perks up – or if those savings will stay under lock and key.
Looking ahead to next week, the jobs report could make for tough reading for Dow bulls. To put it bluntly: May is expected to have been rough.
ING economists predict the labor market participation rate could dive to five-decade lows:
The numbers will undoubtedly be bad – we look for employment to fall by 10 million, bringing the total number of jobs lost to 31 million since February, with the unemployment rate rising to 20% and the participation rate dropping to below 60% for the first time since 1971.
Dow 30 Stocks: Boeing Tumbles, Apple and Microsoft Lead
The Dow 30 was mixed on Friday, and the index was almost evenly split between gains and losses.
Cisco stock headlined the gainers with a 4.9% rally, while Verizon advanced just under 3%.
Boeing found itself among the DJIA laggards, dipping 2.65%. Raytheon and American Express fared even worse; they slid 4.1% and 3%, respectively.