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Market news

3 June 2019

Major US stock indexes finished trading mainly in the red

Major US stock indexes fell predominantly, as the increase in the base materials sector could not outweigh the fall in shares of Internet giants Alphabet (GOOG), Facebook (FB) and Amazon (AMZN) due to fears of toughening industry regulation. Concerns about the trade dispute between the US and China and the slowdown in production growth also put pressure on the market.

Alphabet shares fell 6.6% after reports that the US Department of Justice is preparing an antitrust investigation against Google.

Facebook shares fell by 7.8%, as the news raised fears that the social network might also suffer from tougher norms.

Amazon.com shares fell 5.4% after reporting that the e-commerce giant could face increased antitrust control as part of a new agreement between US regulators.

The market participants also focused on the latest ISM data, which showed that in May, activity in the US manufacturing sector deteriorated moderately, contrary to the forecasted increase. According to the report, the PMI index for the manufacturing sector fell in May to 52.1 points from 52.8 points in April. The latter value was the lowest since October 2016. Analysts had expected the figure to rise to 53.0 points.

At the same time, some reassurance to the markets was brought by a statement by Mexican officials that the country could reach an agreement with the US to resolve the migration dispute, which prompted President Donald Trump to threaten duties last week.

A certain influence on the dynamics of trading was also made by statements by Fed representative Bullard, who noted that lowering the rate "may become justified in the near future" amid trading and inflation risks. "Risks to the prospects for the US economy are growing. Trade uncertainty means that the expected slowdown in US growth may be even sharper than previously thought," Bullard said, adding that lowering rates could lead to the desired increase in inflation. “The markets believe that the Fed’s current interest rates are too high, while inflation and inflationary expectations are still too low. Inverting bond rates now also supports the arguments for lower interest rates,” Bullard said.

Most of the components of DOW finished trading in positive territory (19 in positive territory, 11 in negative). The growth leader was Verizon Communications Inc. (V; + 3.70%). The outsider was Microsoft Corp. (MSFT; -3.27%).

Most sectors of the S & P recorded an increase. The base materials sector grew the most (+ 1.0%). The largest decline was shown by the technology sector (-2.5%).

At the time of closing:

Dow 24,819.78 +4.74 + 0.02%

S & P 500 2,744.22 -7.84 -0.28%

Nasdaq 100 7.333.02 -120.13 -1.61%

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