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Retreating From Record Highs
30-Aug-18 16:25 ET
Dow -137.65 at 25986.92, Nasdaq -21.32 at 8088.39, S&P -12.91 at 2900.87

https://www.briefing.com/investor/markets/stock-market-update/2018/8/30/retreating-from-record-highs.htm

[BRIEFING.COM] Stocks pulled back from record highs on Thursday, extending losses in the afternoon on headlines that President Trump wants to impose tariffs on $200 billion worth of Chinese goods as soon as next week. The S&P 500 and the Dow fell 0.4% and 0.5%, respectively, while the tech-heavy Nasdaq held up a little better, shedding 0.3%.

To be clear, sources said that President Trump hasn't made his final decision regarding the aforementioned round of tariffs -- which, at $200 billion, would be the largest tranche thus far -- but the possibility was apparently enough to spook the market. On a related note, NAFTA negotiations continued in Washington, with the U.S. and Mexico trying to reach an agreement with Canada by the end of the week.

Losses were broad-based on Thursday, with 10 of 11 sectors settling in the red. The lightly-weighted materials sector (-1.3%) was the worst-performing group, but the financials (-0.8%), industrials (-0.8%), and consumer discretionary (-0.6%) spaces also showed notable weakness. The utilities sector (+0.1%) was the lone advancer.

Despite the broad weakness, most FAANG names showed relative strength. Amazon (AMZN 2002.38, +4.28) crossed the $2000 mark for the first time ever, adding 0.2%, and Facebook (FB 177.64, +1.74), Apple (AAPL 225.03, +2.05), and Netflix (NFLX 370.98, +2.94) advanced between 0.8% and 1.0% apiece.

In earnings news, retailers dominated the lineup once again. Dollar Tree (DLTR 79.78, -14.68), Michaels Stores (MIK 17.01, -2.96), and Abercrombie & Fitch (ANF 22.55, -4.67) fell between 14.8% and 17.2% in reaction to their quarterly results, while Guess? (GES 24.23, +1.29) and Signet Jewelers (SIG 67.68, +13.03) rallied 5.6% and 23.8%, respectively.

Looking at other markets, U.S. Treasuries advanced on Thursday, sending yields lower across the curve, with the benchmark 10-yr yield dropping two basis points to 2.86%. Meanwhile, the U.S. Dollar Index ticked up 0.2% to 94.62, ending a four-session slide, and West Texas Intermediate crude futures climbed 1.0% to $70.22/bbl.

Reviewing Thursday's economic data, which included July Personal Income, Personal Spending, and PCE Prices and the weekly Initial Claims report:

Personal income climbed 0.3% in July (Briefing.com consensus +0.4%) following an unrevised increase of 0.4% in June. Meanwhile, personal spending rose 0.4% (Briefing.com consensus +0.4%) following an unrevised increase of 0.4%. The PCE Price Index rose 0.1% in July, and the core PCE Price Index, which excludes food and energy, increased 0.2% (Briefing.com consensus +0.2%).
The key takeaway from the report is twofold: (1) the spending increase puts Q3 GDP on a solid growth track and (2) the year-over-year increase in the PCE Price Index (+2.3% vs. +2.2% prior) and the core PCE Price Index (+2.0% vs. +1.9% prior) will keep the Federal Reserve on its tightening track in September.
The latest weekly initial jobless claims count totaled 213,000, while the Briefing.com consensus expected a reading of 214,000. Today's tally was above the unrevised prior week count of 210,000. As for continuing claims, they declined to 1.708 million from a revised count of 1.728 million (from 1.727 million).
The key takeaway from the report is the recognition that the four-week moving average of 212,250 for initial claims is the lowest since December 13, 1969, underscoring the strength in the labor market.

Looking ahead, the Chicago PMI for August and the final reading for the University of Michigan Consumer Sentiment Index for August will be released on Friday.

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