Stocks fell Friday as increased hopes for a US-China trade deal and a solid jobs report initially pushed the Dow higher but weren’t enough to offset concerns about a lackluster holiday outlook from Apple.
The Dow was down 150 points, or 0.5% in late morning trading. The S&P 500 was down 0.8% as well.
Stocks rallied overseas after Bloomberg reported that President Donald Trump was asking cabinet members to begin drafting a possible trade deal with China.
But CNBC debunked that story, reporting that a White House official said that “there is a long way to go” before any China agreement was reached.
Despite the conflicting reports about US trade talks with China, investors still cheered other news from Washington — the strong October jobs report.
The US economy added 250,000 jobs last month and the unemployment rate held steady at 3.7%, the lowest level in nearly half a century. American workers had more good news too. Wages rose 3.1% from a year ago.
The uptick in wage growth may eventually spark more fears that the Federal Reserve will raise rates more aggressively in order to fight inflation. But investors seemed to be shrugging off those concerns Friday. Bond yields rose only slightly after the jobs report.
Tony Bedikian, managing director and head of global markets for Citizens Bank, said the jobs numbers were a “home run” and that he thinks investors are now looking at higher wages as a plus instead of fearing what they might mean for Fed rate hikes.
“The market is anticipating steady wage gains. They are healthy. Workers are able to spend more because they have more in their pocket,” Bedikian said. “It’s hard to find red flags in the jobs numbers.”
In corporate news, the tech-heavy Nasdaq was down about 1.2%. That was largely due to the fact that Apple (AAPL) — which is also one of the Dow’s biggest components — fell 7% following its latest earnings report. Apple issued a somewhat tepid outlook for the next few months.
Chinese e-commerce giant Alibaba (BABA) dipped slightly after beating earnings forecasts. But the company lowered its outlook for 2019, citing the uncertain state of the global economy.
Still, other blue chip companies reported strong results. Oil giants Exxon Mobil (XOM) and Chevron (CVX) both popped after posting solid gains in profit that topped Wall Street’s forecasts.
And coffee king Starbucks (SBUX) soared 9% after it reported strong sales and earnings after the market closed Thursday.
But not all consumer companies were doing well. Macaroni and cheese and ketchup giant Kraft Heinz (KHC), which is a big stock holding of Warren Buffett’s Berkshire Hathaway (BRKB), plunged 9% as its earnings were lower than expected.
