Wall Street’s three major stock indexes lost ground on Friday, after a week of recovery from the October sell-off, as oil prices fell further and along with additional evidence of a slowing Chinese economy.
Oil prices fell nearly 1.0 percent on Friday and have now seen the longest stretch of daily declines since 1984, on rising global supply and evidence of a slowing world economy.
The United States formally imposed punitive sanctions on Iran but granted eight countries temporary waivers allowing them to keep buying oil from the Islamic Republic.
The S&P energy index was down 0.4 percent after falling 2.2 percent in the previous day’s session when domestic crude confirmed a bear market by falling 20 percent from its most recent high.
The S&P technology index fell 1.7 percent as Apple ended the day down 1.9 percent and the semiconductor was down 1.9 percent. Eight of the 11 major S&P sectors ended the day lower.
The consumer staples index was the best gainer of the day with a 0.5 percent rise while other defensive sectors such as utilities and real estate indexes eked out small gains.
Against the backdrop of the trade policy dispute between the Washington and Beijing, Chinese data showed producer inflation fell for the fourth straight month in October on cooling domestic demand and manufacturing activity, while car sales fell for a fourth consecutive month.
The Chinese data sent global stocks into a tailspin and put pressure on trade and commodity sensitive sectors. Our domestic industrials sector index fell 1.0 percent and materials was down more than 1.4 percent.
The latest data on producer price inflation did little to ease worries about rising interest rates which have hampered gains in stocks this year.
Shares in tobacco companies fell after an official said that the Food and Drug Administration would issue a ban on the sale of fruit and candy flavored electronic cigarettes in convenience stores and gas stations.
Altria Group ended 2.98 percent lower while British American Tobacco’s U.S. shared fell 4.2 percent.
Approximately 7.93 billion shares changed hands on the major domestic equity exchanges as compared to the 8.39 billion share average over the past 20 trading sessions.
Producer Price Index Rises
The nation’s producer price index rose more than expected during October and at its fastest pace in six years, but measures of underlying price pressure cooled, raising the view that the Fed is not facing a resurgence in inflation.
The Labor Department reported Friday morning that prices paid by producers rose 0.6 percent in October, making it the largest gain since September 2012, with much of the increase fueled by a rise in costs for energy and trade services.
Except for a core measure of producer price pressures, cost gains slowed. Producer prices outside food, energy and trade services rose 0.2 percent in October, down from a 0.4 percent gain in September. Compared to a year earlier, these core prices were up 2.8 percent, compared to 2.9 percent in the 12 months through September.
The Fed wants to keep prices for consumers rising 2 percent annually and monitors producer prices for signs that inflationary prices might be building.
During October, those inflationary pressures appeared strongest in relatively volatile goods and services. Producer prices for trade services, which include costs for retailing and wholesaling merchandise, rose 1.6 percent, the biggest gain since October 2014. Costs surged 2.7 percent for energy, the fastest increase in five months.
Consumers surveyed in November expect prices to rise 2.8 percent over the next year, according to the University of Michigan’s survey of consumer sentiment. That’s down from an expectation of 2.9 percent in the university’s October survey. Over the next five years, however, inflation expectations rose slightly.
Consumer sentiment has been on an upward trend since 2015, although the University of Michigan’s November survey showed a slight cooling from October.
A separate report from the Commerce Department indicated wholesale inventories rose 0.4 percent in September, slightly faster than its initial estimate of a 0.3 percent increase.
With job and wage growth bolstering domestic demand, businesses are expected to increase their stocks of goods, which could underpin production at factories. Inventories other than autos, a measure that goes into the calculation of gross domestic product growth, rose 0.2 percent in September.