Stocks fell Friday, as investors were gearing up to listen to President Trump’s press conference on China.
All three major U.S. indices fell to start trading, with the S&P 500 down as much as 0.6%, before easing to a narrower loss. The Nasdaq picked up a small gain by mid morning. The 10-Year treasury yield fell to 0.68%.
Banks lead the market down, as the yield curve between the 2-Year and 10-Year treasuries compressed and cyclical sectors fell. Wells Fargo (WFC) - Get Report, highly exposed to the yield curve, fell more than 3%.
On China, the U.S. market has recently chosen not to focus on political tensions lately, with positive developments overshadowing indications that trade between the two nations may not return to prior levels. But when Trump said late Thursday that he’d speak about China Friday, a good market turned. Investors fear additional tariffs or comments about unwillingness to complete a phase two of a trade deal.
"The [recent] rebound [in stocks] re-ignited mid-month when positive news on vaccines began to emerge,” wrote RBC Capital Markets Chief U.S. Equity Strategist, Lori Calvasina. "The market has been shrugging off early indications that US-China relations are taking a turn for the worse, but this resilience may not last if it becomes the main story investors have to consider."
Elsewhere, consumer spending for April fell 16% year-over-year, worse than MaRch’s reading of a 7% fall. Investors have recently hung their hats on the fact that the economy has bottomed, a story not necessarily seen at first glance in the consumer spending data. The S&P 500 Equal-Weight Consumer Discretionary Index fell 1.68%.