Friday July 20th

20-07-2018

Dow futures fall 120 points after Trump knocks the Fed again for raising rates

U.S. stock index futures declined on Friday after President Donald Trump went after the Federal Reserve again for raising rates. In a tweet, Trump said: "The United States should not be penalized because we are doing so well. Tightening now hurts all that we have done. The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates - Really? Dow Jones Industrial Average futures fell 128 points, pointing to a decline of 118.50 points at the open. S&P 500 futures also pointed to a decline at the open, while Nasdaq 100 indicated a slight gain. Trump's tweet comes after he told CNBC he was not thrilled about the Fed raising rates. In the same interview, he said he is ready to put tariffs on every Chinese good coming to the U.S. if necessary. "I'm ready to go to 500," the president told CNBC's Joe Kernen in a "Squawk Box" interview. "That's going to reignite the trade-war fears," said Peter Cardillo, chief market economist at Spartan Capital Securities. "That can only complicate things in the market." The S&P 500 was up 31 percent since Trump's win in 2016 through Thursday. The market's gain has slowed this year as the Trump administration implemented new tariffs on countries with the S&P 500 up 4.9 percent for 2018 through Thursday. The tariffs have raised concern in the market about a potential slowdown in global economic growth. The Trump administration has already slapped tariffs on $34 billion worth of goods coming from China, to which the Chinese have retaliated with charges of their own. Trump had also previously threatened to put levies on $200 billion worth in goods. Earnings season continued on Friday with General Electric reporting a slightly better-than-expected profit for the second quarter. The company also reaffirmed its financial outlook for the year, sending its stock up more than 1 percent. Baker Hughes shares fell nearly 5 percent as its earnings per share and revenue for the previous quarter came in below Wall Street estimates. Microsoft, meanwhile, rose 3.6 percent after issuing strong revenue guidance. So far, about 16.4 percent of S&P 500 companies have released their latest quarterly results, with 83 percent of them topping analyst expectations, according to FactSet. Wall Street has high expectations for this earnings season, with analysts expecting earnings growth of 20 percent, FactSet said. Asian shares closed mostly higher on the last trading day of the week in choppy trade as yuan weakened to a one-year low before paring its losses, with investors also digesting U.S. President Donald Trump's criticism of the Federal Reserve. The Shanghai composite bounced as the yuan recovered, with the index rising 2.04 percent to close at 2,829.15 after initially trading lower. The smaller Shenzhen composite added 1.13 percent and the blue-chip CSI index finished the day up 1.89 percent. Other major markets in the region also got a boost on the back of the yuan's moves. Hong Kong's Hang Seng Index edged up by 0.58 percent by 3:07 p.m. South Korean stocks finished the day higher after trading both above and below the flat line. The Kospi closed higher by 0.3 percent at 2,289.19. Japan's Nikkei 225 slipped 0.29 percent, or 66.80 points, to close at 22,697.88. Crude prices steadied on Friday and were set for a weekly drop on concerns about oversupply and the ongoing trade conflict between the United States and China, the world's two biggest oil users. Brent oil was 9 cents higher at $72.67 a barrel by 8:16 a.m. ET (1216 GMT). U.S. West Texas Intermediate (WTI) crude for August delivery rose 41 cents to $69.87 a barrel. WTI for September delivery, which becomes the front-month contract on Monday, was down 6 cents at $68.18. Gold prices edged up from one-year lows on Friday after U.S. President Donald Trump expressed concern about the strength of the dollar and interest rate increases by the Federal Reserve, pushing the greenback lower. Spot gold was up 0.56 percent at $1,229.21 an ounce and U.S. gold futures for August delivery rose 0.47 percent to $1,229.70.