Concerns that a trade deal between the U.S. and China may not be imminent reined in a rally in world equity markets and reversed gains on Wall Street on Friday, while strong U.S. wage growth boosted U.S. bond yields.
Markets had earlier climbed on hopes that the world’s two biggest economies were mending their shaky trade relations.
A steep decline in shares of Apple Inc further weighed down sentiment in the U.S. stock market after the iPhone maker warned sales for the crucial holiday quarter would likely miss expectations.
A senior official in the administration of U.S. President Donald Trump on Friday dismissed as untrue a media report that said Trump was preparing a possible trade deal with China, a CNBC reporter said in a post on Twitter.
“There is a long way to go” on negotiations, the unnamed official told CNBC’s Eamon Javers, according to his tweet.
That erased earlier gains in the U.S. stock market and curtailed a rally in global shares that had lifted emerging market stocks up by their largest daily gain since 2016.
The federal government said employers added 250,000 jobs in October, far more than analysts expected. Hourly pay jumped 3.1 per cent, the most since the beginning of 2009.
The S&P 500 index slid 18 points, or 0.7 per cent, to 2,721. The Dow Jones Industrial Average fell 108 points, or 0.4 per cent, to 25,272.
The Nasdaq composite, which has a high concentration of technology companies, lost 91 points, or 1.2 per cent, to 7,342. The Russell 2000 index of smaller-company stocks slipped 3 points, or 0.2 per cent, to 1,541.
The S&P 500 rose 3.8 per cent over the previous three days, but would have to rise another 7.7 per cent to match the all-time high it reached on Sept. 20.
In Toronto, Canada’s main stock index also erased early gains on Friday.
At 11:16 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was down 39.35 points, or 0.25 per cent, at 15,112.87.
Eight of Canada’s 11 major sectors were trading lowering, led by the heavy-weight energy sector’s 1.3-per-cent drop.
Conversely, 0.4-per-cent rise in financials stocks came after data showed that the Canadian economy added jobs in October with a surge in full-time hiring, and the unemployment rate dipped to a 40-year low, underpinning expectations that the Bank of Canada would keep raising interest rates.
The Canadian economy added 11,200 jobs in October on higher full-time hiring, and the unemployment rate dipped to 5.8 percent.
Separate data showed that Canada’s trade deficit in September shrank to $416-million as imports fell at a faster pace than exports, while August imports had been almost $1-billion higher than initially reported.
Imperial Oil Ltd rose 2.4 per cent after reporting quarterly profit that more than doubled as production volumes rose and the company earned more from refining crude.
Sleep Country Canada Holdings Inc. fell 12.4 per cent, the most on the TSX, after its third quarter revenue and profit fall below expectations
South of the border, the Department of Labor said U.S. employers continued to add jobs at a quick clip in September, with no sign that hiring was going to slow down. The proportion of Americans with jobs is at its highest level since January 2009, and the monthly increase in pay was also the largest since then. Along with high consumer confidence, those are all good signs for economic growth and consumer spending in the months to come.
Bond prices dropped. The yield on the 10-year Treasury note rose to 3.18 per cent from 3.14 per cent. That hurt high-dividend companies, which made big gains in October during the market’s slump.
Apple’s sales in its latest quarter and its estimates for the holiday season both disappointed experts. The tech giant also surprised investors by saying it will no longer disclose the number of iPhones it sells each quarter. Apple was unique among big smartphone makers in saying how many phones it sold and what the average price was. Apple gets most of its revenue from iPhone sales and lately it’s boosted its profits by selling higher-priced models.
The unexpected change raised suspicions that Apple might be trying to mask a downturn in the phone’s popularity. The company says the quarterly numbers and prices didn’t necessarily tell investors how strong its business has been.
Apple sagged 6.4 per cent to $207.93. Chipmakers also fell. Qorvo lost 5 per cent to $74.56 and Skyworks Solutions fell 3.9 per cent to $85.96.
The governments of the U.S. and China both said they were making some progress in trade talks. It’s been months since the two sides made any visible progress and fears that the dispute was getting worse contributed to the big losses for global stocks in October. Chinese state media also said President Xi Jingping promised tax cuts and other help to China’s entrepreneurs in a renewed effort to revive state-dominated economy.
Germany’s DAX rose 0.8 per cent and the CAC 40 in France jumped 0.5 per cent. Britain’s FTSE 100 rose 0.1 per cent.
Asian stock indexes skyrocketed. The Hang Seng index in Hong Kong soared 4.2 per cent and Japan’s Nikkei 225 index surged 2.6 per cent while South Korea’s Kospi climbed 3.5 per cent.
Starbucks’ sales were better than expected, and customers spent more after it raised prices for brewed coffee. It said revenue from cold drinks improved as well, and revenue also improved in China. The stock jumped 10.4 per cent to $64.70.
Security software company Symantec also climbed after it did better than Wall Street expected in its fiscal second quarter. Its stock rose 6.4 per cent to $19.92. Insurance company MetLife gained 4.7 per cent to $43.93 after it posted a larger profit than analysts expected in the third quarter.
Kraft Heinz sank 7.9 per cent to $51.77 after its profit in the third quarter fell way short of analyst forecasts. The maker of Oscar Mayer meats, Jell-O pudding and Velveeta cheese said costs grew and it’s continuing to make major investments in its business. Prices in the U.S. fell as stores ramped up discounts, especially for cheeses and drinks.
Other food companies also fell. General Mills lost 4.3 per cent to $42.40 and Conagra Brands shed 2 per cent to $34.92.
Oil prices continued to slip. Benchmark U.S. crude fell 1 per cent to $63.08 a barrel in New York and Brent crude fell 0.3 per cent to $72.65 a barrel in London.
Reuters and The Associated Press