Summary

The major domestic equity indexes closed out the trading day in negative territory once again on Friday, as investors continued their concern over a possible trade war with China. In a volatile session, the S&P 500 came within a hair of its 200-day moving average, a key technical level. The benchmark index also nudged closer to its February low, which marked a correction, ending 9.9 percent lower than its Jan. 26 record.

President Donald Trump’s plans for tariffs on up to $60 billion in Chinese goods moved the world’s two largest economies closer to a trade war as China declared plans to levy duties on up to $3 billion of our imports, including fruit and wine, even as it urged the United States to “pull back from the brink.”

For the week, the Dow was down 5.67 percent, the S&P 500 was down 5.95 percent and the Nasdaq was down 6.54 percent, marking their larggest weekly percentage declines since January 2016.

The Dow was down 11.6 percent since its Jan. 26 high, and hit its lowest close since confirming a correction in February.

The Cboe Volatility Index ended the day up 1.53 points at 24.87, its highest close since Feb. 13.

The S&P’s financial sector was the S&P’s biggest percentage loser, at 3 percent, after a volatile session in which it was whip-sawed by volatile Treasury yields.

Bloomberg News cited China’s ambassador to the United States saying that the country is “looking at all options” in response to tariffs, which could include scaling back purchases of U.S. Treasuries.

Nasdaq was weighed down by declines in momentum stocks such as Facebook, Amazon, Microsoft and Google’s parent Alphabet.

The semiconductor sector took a fall after Micron Technology’s quarterly report stoked fears about falling NAND prices. The Philadelphia Semiconductor index fell 3.3 percent.

Approximately 8.11 billion shares changed hands on the major domestic equity exchanges, a number that was above the 7.3 billion share average for the past 20 trading days.

Capital Goods Orders Rise

New orders for capital goods rebounded more than expected in February after two straight monthly declines and shipments surged, which could temper expectations of a sharp slowdown in business spending on equipment in the first quarter.

The Commerce Department’s report on Friday prompted some economists to raise their economic growth estimates for the first three months of the year. They were slashed last week after data showed retail sales fell in February for the third month in a row.

The Federal Reserve painted an upbeat picture of the economy on Wednesday when it raised interest rates and forecast at least two more increases for 2018.

Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 1.8 percent last month. That was the largest gain in five months and followed a downwardly revised 0.4 percent decrease in January. Core capital goods orders increased 7.4 percent on a year-on-year basis.

Shipments of core capital goods increased 1.4 percent last month, the largest advance since December 2016, after an upwardly revised 0.1 percent gain in January. Core capital goods shipments are used to calculate equipment spending in the government’s gross domestic product measurement.

They were previously reported to have slipped 0.1 percent in January. Business spending on equipment powered ahead in 2017 as companies anticipated a hefty reduction in the corporate income tax rate.

The surge in core capital goods orders in February suggests further gains. There had been concerns spending could slow sharply after double-digit growth in the past quarters. However, the threat of a trade war could cause businesses to curtail spending on equipment.

Investment in equipment remains underpinned by robust business confidence, strengthening global economic growth and a weakening dollar, is raising demand for our exports. That is helping to support manufacturing, which accounts for about 12 percent of our economic activity.

The strength in core capital goods shipments, together with a surge in industrial production in February, could help offset the impact of soft consumer spending on first-quarter growth.

Orders for machinery were up 1.6 percent last month. There were also large increases in orders of primary metals and electrical equipment, appliances and components.

Orders for computers and electronic products fell 0.2 percent, with bookings for communications equipment recording their largest decline since December 2015.

Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, were up 3.1 percent last month as demand for transportation equipment rose 7.1 percent. That followed a 3.5 percent decline in January. Orders for motor vehicles and parts increased 1.6 percent last month after edging up 0.1 percent in January.

New Home Sales Fall

According to a report by the Commerce Department on Friday, new home sales fell for a third straight month in February, suggesting a moderation in growth in spending on residential construction in the first quarter.

The Department reported last month that the economy grew at a 2.5 percent pace in the fourth quarter. However, revisions to December data on construction spending, factory orders and wholesale inventories have suggested the fourth-quarter growth estimate could be raised to a 3.1 percent pace. The government will publish its third GDP estimate on Wednesday.