Stocks ended lower Friday after Chinese trade officials canceled a visit to the U.S. Farm Belt, which had initially been scheduled to take place after trade meetings in Washington, D.C., this week.
The Montana Farm Bureau Federation and Nebraska Department of Agriculture confirmed to Yahoo Finance that Chinese officials would no longer be meeting with farms in the state next week. No reasoning was provided for the change in scheduling. Reuters first reported news of the Chinese delegation’s shift in plans.
U.S. and Chinese deputy-level trade officials met in Washington, D.C., Thursday and Friday for their first in-person trade talks in nearly two months. These had been viewed as a key stepping stone in laying the foundation for higher-level negotiations set to take place in October.
Here were the main moves in the market at the end of regular equity trading:
S&P 500 (^GSPC): -0.49%, or 14.72 points
Dow (^DJI): -0.59%, or 159.72 points
Nasdaq (^IXIC): -0.8%, or 65.21 points
U.S. crude oil prices (CL=F): -0.07% to $58.09 per barrel
10-year Treasury yield (^TNX): -5.3 bps to 1.721%
Gold (GC=F): +1.16% to $1,523.70 per ounce
Meanwhile, investors are anticipating a high-volume end to the trading day, with Friday comprising both the rebalancing of the S&P 500, 400, 600 and SOX semiconductor index, along with a so-called “quadruple witching” session, or the quarterly expiration day for futures and options on indices and stocks.
The collision of these separate major market events has historically brought about some of the biggest trading days of the year, with volume typically increasing notably around the end of the session.
Friday also marks the end of a crowded week for major central bank decisions, headlined in the U.S. with the Federal Reserve’s decision to cut rates at the close of a second consecutive meeting. In monetary policy statements and subsequent public remarks, the Fed – as well as other central banks including the Bank of England and Bank of Japan – continued to underscore the negative impacts to growth as a result of the ongoing trade war with China.
But even after largely delivering on market expectations for a September rate cut, the Fed is far from in the clear until its next policy-setting meeting in October.
This week, the Fed’s ability to rein in market interest rates was tested, after short-term rates to borrow dollars in the financial system surged above the upper bound of the Fed’s target range, now set between 1.75% and 2.00%.
While some have pointed to short-term factors – including the timing of corporate tax payments and settlements of newly auctioned U.S. Treasuries – as cause for the sudden liquidity squeeze, others have suggested the week-long incidences point to a more systemic problem as the Fed struggled to enforce the implementation of its policy decisions in the open market.
Fed Chair Jerome Powell has dismissed this, however, and said during a press conference Wednesday that “elevated” money market pressures this week “have no implications for the economy or the stance of monetary policy.”
Friday morning, the New York Federal Reserve added another $75 billion into the financial system in a fourth overnight repo transaction in as many days this week, in another move to try and bring rates back down within range. Later, the New York Fed said in an announcement that repo operations would continue through October 10, comprising three 14-day operations for $30 billion and ongoing overnight operations of at least $75 billion each.
Four Fed speakers delivered public remarks on Friday, including New York Fed President John Williams, Fed Vice Chairman Richard Clarida, Boston Fed President Eric Rosengren and Dallas Fed President Robert Kaplan.
In an interview with CNBC Friday, Clarida said the Fed’s policy-setting was being driven on a “meeting by meeting” basis.
“We’re not on a preset course,” he told CNBC’s Sara Eisen. He did, however, note that seven Federal Open Market Committee (FOMC) members expect another rate cut this year, which had previously been telegraphed in the Fed’s last monetary policy update and dot plot. Clarida is a voting member of this year’s FOMC.
Later in the morning, Rosengren – one of two dissenters of the Fed’s latest rate cut decision – in public remarks justified his dissent by saying he did not believe the U.S.-China trade dispute has had a “particularly large” impact on the U.S. economy.
He added that lower rates would encourage increased leverage in financial markets, with cheap financing leading “prices for risky assets” to reach “levels that may not be sustainable over time.”
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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