Here Are 3 Hot Things to Know About Stocks Right Now

  • The Dow Jones Industrial Average ended sharply lower Thursday as the trade war between the U.S. and China intensified.
  • NeoPhotonics (NPTN - Get Report) cut its second-quarter guidance amid lower revenue expectations resulting from the U.S. ban on business with Huawei Technologies.
  • Best Buy (BBY - Get Report) beat Wall Street's first-quarter earnings expectations and confirmed its full-year profit guidance, but was still ended down.

Wall Street Overview

Stocks ended sharply lower Thursday as investors reacted to the intensifying trade war between the United States and China.

The Dow Jones Industrial Average, which fell as much as 448 points, finished down 286 points, or 1.11%, to 25,490, the S&P 500 fell 1.19%, and the tech-heavy Nasdaq declined 1.58%. 

Some of the Nasdaq's biggest laggards were JD.com (JD - Get Report) , the Chinese e-commerce company, down 5.4%, and chipmakers Advanced Micro Devices  (AMD - Get Report) , down 3.8%, Micron Technology (MU - Get Report) ,  down 2.6%, and Nvidia  (NVDA - Get Report) , down 3.2%.

Gao Feng, spokesperson for China's Ministry of Commerce, said Thursday that talks between the world's two largest economies can only resume if the U.S. adjusts "its wrong actions."

Treasury Secretary Steven Mnuchin told the House Financial Services Committee that there were no scheduled talks with high level officials in Beijing, but added that presidents Donald Trump and Xi Jinping likely would meet at next month's G-20. He also suggested that a decision for further tariffs on China-made goods won't be made "for another 30 to 45 days," which overlaps with the late June summit in Japan.

Tariffs on $200 billion of U.S. imports from China increased to 25% beginning May 10. A study by the Federal Reserve Bank of New York found that the total annual cost of these new tariffs to the typical U.S. household is $831.

Meanwhile, the Trump administration announced a $16 billion trade aid program for American farmers  who have been hurt by the U.S. trade war with China.

"Investors are differentiating among sectors, favoring more domestic and defensive areas like real estate, utilities, telecom and consumer goods," said Alec Young, managing director of global markets research, FTSE Russell.  "Conversely, sectors most exposed to global woes and Chinese trade like technology and industrials are bearing the brunt of growing investor unease."

Young added that "continued weak global economic data and the lack of a specific date for the resumption of U.S.-China trade talks are clouding earnings visibility and weighing on risk appetite."

"Markets are pricing in the harsh reality that trade tension is more likely to linger than quickly be resolved as had been the consensus expectation anchoring sentiment until late April," he said.

"Investors are concerned that the trade dispute with China is taking a turn for the worse as both sides are starting to get entrenched in their positions," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. "Lack of a trade deal with China - or even a long postponement of a deal - is going to reignite growth fears and cause stocks to go lower."

Apple (AAPL - Get Report) slumped as investors grow increasingly concerned that the current U.S.-China trade dispute will ensnare iconic companies in damaging tech cold war. Apple was down 1.7% to $179.66.

Optical components maker NeoPhotonics (NPTN - Get Report) cut its second-quarter guidance amid lower revenue expectations resulting from the U.S. ban on business with Chinese telecom giant Huawei Technologies. Shares were down 3.9% to $2.27.

Best Buy  (BBY - Get Report) beat Wall Street's first-quarter earnings expectations and confirmed its full-year profit guidance, as consumer electronics sales helped comparable revenues top analysts' forecasts. Still, shares were off 4.9% to $65.78.

Hormel Foods (HRL - Get Report)  posted quarterly earnings that were in line with analysts' forecasts, though warned that the impact of African swine fever on hog and pork prices affected its quarterly sales, and will continue to impact revenue and earnings. Shares were down nearly 1% to $39.16.

Shares of data- and cloud-storage services company NetApp (NTAP - Get Report) sank 8.1% to $61.66 after it reported weaker-than-expected earnings and revenue, and also forecast an upcoming drop in quarterly sales and profit.

The trade war is also having an impact on oil prices. Brent crude contracts for July delivery, the global benchmark for oil prices, were marked $3.19 lower from their Wednesday close in New York and changing hands at $67.80 per barrel while WTI contracts for the same month were seen $3.50 lower at $57.92 per barrel.

In economic news, initial claims for state unemployment benefits dropped 16,000 to a seasonally adjusted 212,000 for the week ended May 11, the Labor Department said.

The U.S. manufacturing purchasing managers index, or PMI, was 50.6 in May, the lowest level since September 2009, according to financial data firm IHS Markit.

 
Sales of new single-family homes dropped 6.9% to 673,000 from March to April, the U.S. Census Bureau and the Department of Housing and Urban Development. March's sales pace was revised up to 723,000 units, the highest level since October 2007, from the previously reported 692,000 units.
 
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