U.S. markets showed strength throughout much of Friday’s action following reports White House and Chinese officials spoke over the phone, with Treasury Secretary Mnuchin suggesting face-to-face talks could follow. However, the upside momentum faded late in the session as geopolitical tensions between the U.S. and Iran returned after an American Navy ship destroyed an Iranian drone.
The lower close capped a negative week for the major indexes with near-term support levels now in play following the late day fade from previous all-time highs. Volatility spiked to elevated levels and into the closing bell with 2Q earnings ramping up significantly into this week and next.
The Nasdaq traded in a 101-point range after falling 0.7% while closing a couple points off its session low of 8,144. Current and upper support at 8,150-8,100 was breached and failed to hold with risk toward 8,050-8,000 on a move below the latter.
The S&P 500 gave back 0.6% despite tapping an intraday high of 3,006
but failing resistance at 3,000 for the 2nd-straight session. Upper support at 2,975-2,950 held on the session low with a close below the latter opening up risk towards 2,925-2,900 and the 50-day moving average.
The Russell 2000 was off 0.5% following the late day pullback to 1,547 and session low. Near-term and upper support at 1,550-1,535 was breached and failed to hold with a close below the latter and the 50-day moving average signaling additional weakness towards 1,525-1,520 and the 200-day moving average.
The Dow was down 0.3% following the late day backtest to 27,145. Prior and upper support from mid-month at 27,000-26,750 held with a close below the latter getting 26,500-26,250 and the 50-day moving average back in focus.
For the week, the S&P 500 and the Nasdaq dropped 1.2%. The Russell 2000 sank 1.6% and the Dow fell 0.7%.
Industrials and Energy led sector strength on Friday with gains of 0.6% and 0.5%, respectively. Real Estate and Utilities paced sector laggards after tanking -1.6% and -1.5%.
The only sectors that showed gains for the week were Consumer Staples (0.2%) and Materials (0.1%). Services (-3.2%), Energy (-2.6%) and Real Estate (-2.2%) were the weakest performing sectors last week.