Dow Ends Lower in Narrow Trading Friday; Markets Shrug Off Global Tensions

Here Are 3 Hot Things to Know About Stocks Right Now

  • The Dow Jones Industrial Average ended lower Friday but investors largely ignored  tensions in the Middle East, weak data from China, and disappointing revenue and demand outlooks from Broadcom (AVGO - Get Report) .
  • Chipmaker Broadcom tumbled after beating quarterly earnings expectations but missing revenue estimates and saying it sees a slowdown in demand.
  • Shares of Chewy.com (CHWY) , an online retailer of pet food and supplies, jumped 59.1% to $34.99 after it debuted on the New York Stock Exchange. Chewy.com is Real Money's Stock of the Day.

Wall Street Overview

The Dow ended lower Friday but investors largely ignored tensions in the Middle East over the attack on two tankers in the Strait of Hormuz, weak economic data from China, and a disappointing demand outlook from Broadcom (AVGO - Get Report) that pulled down the semiconductor sector.

The Dow Jones Industrial Average, which fell as much as 118 points, ended down 17 points, or 0.07%, to 26,089, the S&P 500 slipped 0.16%, and the Nasdaq tumbled 0.52%.

Cisco (CSCO - Get Report) , 3M (MMM - Get Report) , and Intel  (INTC - Get Report) led the Dow's retreat.

The U.S. blamed Iran for Thursday's suspected attacks on the tankers, denouncing what it called a campaign of "escalating tensions" in a region crucial to global energy supplies. 

U.S. military officials on Friday released a video they said shows Iran's Revolutionary Guard removing an unexploded limpet mine from one of the oil tankers targeted near the Strait of Hormuz, suggesting the Islamic Republic sought to remove evidence of its involvement.

"Taken as a whole, these unprovoked attacks present a clear threat to international peace and security, a blatant assault on the freedom of navigation and an unacceptable campaign of escalating tension by Iran," said U.S. Secretary of State Mike Pompeo.
 
The Japanese owner of one of the oil tankers said that the vessel was struck by a projectile and not by a mine, CNBC reported.
 
Meanwhile, China's industrial output growth in May slowed to 5%, below expectations of 5.5% and the weakest reading since early 2002, as the trade battle between the U.S. and China continues without a near-term settlement in sight.
 
Eddie Perkin, chief equity investment officer with Eaton Vance Management, noted that the market has been resilient despite the turmoil.
 
"The markets are comfortable with these shocks and risks," he said. "It's quite a resilient market. I think it all goes back to the Fed and the strong expectation that the Fed's going to be cutting rates. You've got this push-pull with (President Donald) Trump taking a hard line on trade and the Fed seemingly ready to ease and the interaction between those two macro-themes is what's moving the market more than the individual specific items you might have expected to."
 
Alec Young, managing director of global markets research at FTSE Russell, said that "investors are counting on the G-20 to produce some sort of positive trade breakthrough." The G-20 summit will take place June 28-29 in Osaka, Japan.
 
"Thankfully, traders are more confident on the monetary policy front, believing the Fed will signal a willingness to cut rates in July if needed at their June 19 meeting," Young said. "But all in all, the sudden emergence of geopolitical risk comes at an inopportune time given how much investors already have on their macro plates."
 
Oil prices turned higher Friday after the International Energy Agency reduced its forecast for global oil demand for the second consecutive month, to 1.2 million barrels a day this year from 1.3 million barrels a day.
 
Brent crude for August delivery rose 1.29% to $62.10 a barrel. West Texas Intermediate contracts for July, which are more tightly linked to U.S. gas prices, rose 0.46% at $52.52 a barrel.

Chipmaker Broadcom, the top loser on the Nasdaq, tumbled 5.6% to $265.93 after beating quarterly earnings expectations but missing revenue estimates and said it sees a slowdown in demand. CEO Hock Tan said "the U.S.-China trade conflict including the Huawei export ban is creating economic and political uncertainty and reducing visibility."

Other chipmakers lost ground, including Micron (MU - Get Report) , Advanced Micro Devices (AMD - Get Report) , Nvidia (NVDA - Get Report) and Qualcomm (QCOM - Get Report)   .

Shares of Chewy.com (CHWY) , an online retailer of pet food and supplies, shares jumped 59.1% to end at $34.99 in their debut on the New York Stock Exchange. Chewy.com is Real Money's Stock of the Day.

Tesla (TSLA - Get Report)  rose slightly to $214.92 amid reports that U.S. officials denied its request for tariff relief on the autopilot 'brain' of its flagship Model 3 sedan.

In economic news, U.S. retail sales rose at a slower-than-estimated pace last month, though the government revised a prior report that had shown a drop in sales during April.

The University of Michigan's preliminary sentiment index fell to 97.9 from 100 in May due to tariffs as well as slowing gains in employment. Most of the concern was with the 25% tariffs on nearly half of all Chinese imports.

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