Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
James Hyerczyk
U.S. Equity Indexes

The major U.S. equity indexes finished lower on Friday after giving back earlier gains. Optimism over the start of low-level trade talks between the United States and China helped drive the indexes higher shortly after the opening as investors increased bets that these talks would lay the groundwork for the higher-level negotiations that are scheduled to begin in early October.

In the cash market on Friday, the benchmark S&P 500 Index settled at 2992.07, down 14.72 or -0.53%. The blue chip Dow Jones Industrial Average closed at 26935.07, down 159.72 or -0.63% and the technology-based NASDAQ Composite finished at 8117.67, down 65.21 or -0.85%.

Pessimism filled the markets late Friday turning a positive day into a negative day after a Chinese delegation canceled a visit to U.S. farms in Montana and officials headed back to China earlier than planned.

An Overreaction?

The sudden itinerary change put a damper on U.S.-China trade optimism, reversing stock market gains, but investors seem to be the only ones showing displeasure, which leads me to believe it was an overreaction that sent stocks lower. Just like in May when investors were overly optimistic about a pending trade deal, investors faced a similar situation last week as they continued to press stocks higher on the hope that last week’s low-level talks would be the first steps towards a trade deal between the two economic powerhouses.

Experts have been warning investors for weeks not to expect too much from the high-level trade talks in early October so it goes without saying that investors shouldn’t have placed so much weight on the outcome of last week’s low level talks.


No Concern from the White House or China

The surprise move by the Chinese delegation may have rattled investors but White House officials seemed to take it in stride. Furthermore, President Trump had no response on Twitter, which means the event has largely been dismissed.

In a brief statement Friday, the Office of U.S. Trade Representative sounded a positive note on the talks. “These discussions were productive, and the United States looks forward to welcoming a delegation from China for principal-level meetings in October,” the statement said.

China’s Commerce Ministry, in a brief statement, described the talks as “constructive”, and said they had also had a good discussion on “detailed arrangements” for the high-level talks in October.

“Both sides agreed to continue to maintain communication on the relevant issues,” it added, without elaborating.

What It All Means

Friday’s sell-off only means it’s hard to sustain rallies build on hope because fear will eventually overcome hope.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Trade With A Regulated Broker

  • Your capital is at risk
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.