Dow slides on trade war worries
Stocks finished the week lower on Friday.
The Dow closed 160 points, or 0.6%, lower, while the S<><>&P 500 dropped 0.5%. The Nasdaq Composite finished down 0.8%./ppAll three indexes dropped week-on-week, falling for the first time in three weeks. The Dow fell 1.1% from last week, while the S<><><><><><><><><><><><><><><><><><><><><><><><><><><><> <><><><><>P came off 0.5%. The Nasdaq registered a weekly drop of 0.7%, according to Refintiv./ppAll three indexes are now poised for a weekly loss./ppStocks traded in positive territory for much of the day, until a Chinese delegation in the United States canceled a scheduled visit to US farm country in Montana, according to Reuters. That sent stocks into negative territory./pp”Any headline pertaining to US-China tariffs will have an effect on the tape — good and bad,” said Jonathan Corpina, senior managing partner at Meridian Equity Partners. “We are starving for information relating to that topic.”/ppEarlier, things looked better on the trade front, with Washington announcing it has a href=”https://www.cnn.com/2019/09/20/economy/china-us-tariff-exemptions/index.html” target=”_blank”excluded more items from the import tariffs/a on Chinese goods, according to a href=”https://www.federalregister.gov/agencies/trade-representative-office-of-united-states” target=”_blank”notices from the US Trade Representative/a./ppEuropean and Asian markets finished mostly higher./ppThe 10-year US Treasury bond yield was lower at 1.722%. The US dollar, measured by the ICE US Dollar Index, is up 0.2%./ppOne issue that has “captured the market’s attention this week is not so much the second Fed cut of this the year and prospects for a third cut, but the disruption with the plumbing,” said Marc Chandler, chief market strategist at Bannockburn Global Forex, in a note to clients./ppThe New York Fed on Friday embarked on its fourth repo operation in a row to a href=”https://www.cnn.com/2019/09/19/business/overnight-lending-market-turmoil/index.html” target=”_blank”inject liquidity into overnight lending markets/a for the weekend ahead. Between Tuesday and Friday, the regional central bank injected $278 billion in the market./ppThese markets experienced a liquidity squeeze earlier this week, thanks to an oversupply of Treasuries and a lack of money to be put to work as companies were due to pay their quarterly tax bills./pp”Precisely how the Fed addresses it, such as a standing repo facility or allowing the balance sheet to expand organically like it did through most of its history, is not yet clear, though we suspect a combination of measures will be taken,” Chandler said./ppQuadruple witching/ppFriday also marked what is known as quadruple witching, the simultaneous expiration of futures and options on stocks and indexes./ppExpiring contracts like that can spur volatility in the market and lead to higher trading volumes./p