Wall Street closes down a terrible week firmly in the red, Dow up 14% for the year-to-date

US Stocks finished off the week at their lowest levels in a month following the escalation of trade wars between China and the US and a less dovish Federal Reserve outcome. Consequently, the Dow lost 2.6% for the week, the S&P 500 index fell 3.1% for the week and the Nasdaq Composite dropped 3.2% for the week.

On Friday, the Dow Jones Industrial Average, DJIA, lost 98.41 points, or 0.4%, to end at 26,485, while the S&P 500 ended 21.51 points, or 0.7%, to finish at 2,932.05. The Nasdaq Composite Index lost  107.05 points at 8,004.07, to fall 1.3%. For the S&P, the benchmark was losing ground for the fifth straight day, to record the steepest weekly loss since last December’s selloff and dropped to its lowest level since June 26. The Dow made the biggest weekly loss since May 31 and is off 3.20% from its record close 27,359 on July 15. the Dow is up 14% for the year-to-date.

In a series of tweets on Thursday, for which a team of advisors reportedly weighed-in on the language, the US President announced that yet another $300B worth of Chinese imports will be subject to 10% tariffs as of September 1st. This shook markets to its core. The escalation is a threat to global growth and stocks have taken the brunt of it at the same time as second-quarter corporate earnings for S&P 500 companies are on course for a record a decline for two consecutive quarters for the first time since 2016.

US data remains solid

One bright spot, however, came in the US jobs data. Today's release of US Nonfarm Payrolls was the icing on the cake of this data-intensive week following the Fed's hawkish stance earlier and there was a focus on the US jobs data in order to assess the Fed's future actions. US Nonfarm payrolls rose 164,000 in July, almost identical to the 165,000 consensus forecast. There were 41,000 downward revisions to the past couple of months which took the jobs below the 220,000 or so average seen through 2018. On balance, however,  analysts at ING Bank argued that the report shows that US companies still have an appetite to hire:

"Indeed, we continue to argue that a slowdown in hiring should be expected. This is the longest US economic expansion since records began in 1854 with unemployment close to 50-year lows at 3.7% (same as in June) so it is unsurprising that companies complain that difficulty finding suitable workers is the biggest constraint on hiring.

DJIA levels

The DJIA index extended losses below the 20-DMA and 50-DMA but found support in the afternoon around the June 11 highs in the 26200s. Bears can look to the 200-DMA at 25558 ahead of the start of June swing lows down at 24680. A push tot he upside opens prospects to 26616 and the Jan 2018 highs.