U.S. markets were showing some strength ahead of Friday’s open but reversed course following news China will implement 5% to 10% tariffs on a further $75 billion of U.S. goods. Fed Chair Jerome Powell’s speech shortly after the open wasn’t much help as he was coy on interest rates with President Trump fuming afterwards, saying Powell did NOTHING.
The major indexes worsened after President Trump promised an announcement regarding his plans in response to China’s tariff reaction while ordering U.S. companies to find alternatives to producing goods in China. The heated talk extended the overall market’s losing streak to 4-straight weeks with volatility spiking, but holding a key level of resistance.
The Russell 2000 tumbled 3.1% after tapping a late day low of 1,456. Prior and major support from early June at 1,460 and earlier this month was stretched but failed to hold with fresh risk to 1,440-1,425 on continued weakness.
The Nasdaq plummeted 3% following the afternoon pullback to 7,730.Near-term and upper support at 7,750-7,700 was breached but held with a close below the latter opening up risk towards 7,650-7,600 and the 200-day moving average.
The S&P 500 sank 2.6% after testing a low of 2,834 ahead of the closing bell. Current and upper support at 2,850-2,825 failed to hold with a move below the latter and the monthly low at 2,822 getting 2,800 and the 200-day moving average in play.
The Dow was rocked for 2.4% following the second half pullback to 25,507. Upper support at 25,600-25,400 and the 200-day moving average was breached but held with a close below the latter and the monthly low at 25,339 signaling additional weakness.
For the week, the Russell 2000 was down 2.2% and the Nasdaq declined 1.8%. The S&P 500 fell 1.4% and the Dow dropped 1%.
There was no sector strength on Friday. Energy and Technology were the leading sector laggards after tanking 3.4% and 3.3%, respectively.
The best performing sectors for the week were Consumer Discretionary (0.5%) and Utilities (0.2%). Materials (-3%) was the leading sector laggard, followed by Healthcare (-2%), Energy (-1.9%), and Financials (-1.8%).