The sell off continues as concerns over trade build, coupled with the infrastructure showdown in D.C. yesterday. China is saying that trade talks cannot continue unless the U.S. deals with its “wrong actions.”
While specific actions were not mentioned, restriction placed on Huawei by the U.S. is among the issues. However, Secretary of State Mike Pompeo maintains that Huawei ‘s CEO simply “isn’t telling the American people the truth” on its ties to the Chinese government. He added, “For them to say that they don’t work with the Chinese government is false.”
All the negativity surrounding trade is impacting Europe as well, which was just starting to show signs of stabilizing. The May flash manufacturing PMI for the Eurozone declined further into contraction, and Germany's Ifo Business Climate Index fell to its lowest level since 2014 in May.
Meanwhile, President Trump said he will not work on an infrastructure bill while the Democrats are investigating him. This is dragging down key names in that space.
Key support for the Dow Jones Industrial Average
- Big Downside Gap 25,691
- Recent Low Point 25,324
This morning we received initial jobless claims for the week ending May 18. Claims were down 1,000 to 211,000 and the 4-week moving average declined by 4,750 to 220,250. Continuing claims increased by 12, 000 to 1,676,000 and the 4-week average increase by 5,000 to 1,674,250. The numbers continue to represent a tight labor market.
Its been a tough time for chip stocks, and this month alone, the sector is down about 12%. The antitrust ruling on Qualcomm (QCOM) is continuing the drag down.