Stocks closed lower Thursday, as the U.S. and trade partners exchanged new tariffs. The tariffs fueled fears of a trade war and what impact it could have on the global economy.
XNearly all 30 components of the Dow Jones industrial average closed lower, sending the index down 1% for the day. The Dow did manage to close above the 50-day moving average, although it has a small margin above that key line. Caterpillar (CAT), an industrial sensitive to trade restrictions, was one of the weakest Dow components. It lost 2%.
The S&P 500 fell 0.7% as indexes came off session lows in the final couple of hours. The small-cap Russell 2000 fell 0.8%. But the technology-heavy Nasdaq composite fell only 0.3%, as biotech, internet, fiber optic and software stocks had some of Thursday's best gains.
Volume was higher, according to preliminary figures.
Retail, data storage, machinery and some food-related industry groups suffered the largest losses. Declines were broad, with just about every S&P sector down on the day.
Wall Street was rattled after President Trump's administration said it would levy import tariffs on aluminum and steel products starting Friday. U.S. trade partners swiftly retaliated. The EU promised 25% tariffs on $3.3 billion worth of U.S. imports starting June 20. Mexico announced plans to impose tariffs on pork bellies, apples, grapes, cheeses and flat steel. Canada announced tariffs on U.S. steel, aluminum and other products.
Steel Stocks Mixed
IBD's steel producers industry group was one of the day's best performers, up 1%. But steel and aluminum stocks gave back most of their early gains, and some reversed lower. U.S. Steel (X) closed 1.7% higher after rising 8%. Steel Dynamics (STLD) and Alcoa (AA) reversed lower. Century Aluminum (CENX) climbed 3%.
In other sectors, Micron Technology (MU) was a drag on the IBD 50, after shares plunged 8% in heavy volume. Morgan Stanley downgraded the stock on valuation concerns following a big advance this month. The stock had just topped a cup base with a 63.52 entry but fell as much as 10% from that level.
Facebook (FB) leaped about 2% as it cleared the 188.42 buy point of a handle in its 17-week pattern. But volume was suspiciously light, about 40% less than normal. Still, the relative strength line made a new high.
Keysight Technologies (KEYS) tore out of a flat base with a 55.31 buy point in huge volume. The company late Wednesday posted a 30% rise in earnings. Credit Suisse raised the price target on the product development technology firm to 60 from 57.
Extended Stay America (STAY) cleared the 20.80 buy point of a cup with handle base. Shares gapped up after Morgan Stanley upgraded the stock to overweight from equal weight, and Jefferies initiated coverage with a buy rating and 26 price target.
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