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  • Dow fell 70.87 points or 0.26%, to 26,820.25.
  • S&P 500 dropped 15.83 points, or 0.53%, to trade at 2,961.79.
  • The Nasdaq Composite Index lost 91.03 points, or 1.13%, at 7,939.63.

Reports that the US administration is considering potential curbs on U.S. portfolio investments into China weighed on US stocks on Friday making for another week of declines. For the week, the Dow lost 0.43%, the S&P 500 dropped 1.01%, while the Nasdaq ended 2.19% lower for the week.

On the day, the Dow fell 70.87 points or 0.26%, to 26,820.25, giving up opening gains, while S&P 500 dropped 15.83 points, or 0.53%, to trade at 2,961.79. The Nasdaq Composite Index lost 91.03 points, or 1.13%, at 7,939.63.

At the start of the day, the Dow opened 29.30 points firmer, closing lower during the previous session following the release of a whistleblower complaint against Donald Trump in relation to a call between the president and his Ukrainian counterpart, Volodymyr Zelensky.

Trade tensions strip out recent optimism  

However, in a Bloomberg article, it was reported that “Trump administration officials are discussing ways to limit U.S. investors’ portfolio flows into China in a move that would have repercussions for billions of dollars in investment pegged to major indexes, according to people familiar with the internal deliberations.”

This comes ahead of planned talks in October and has thus weighed on sentiment and stripped away some of the optimism that had been started to be priced in again to global equities on such comments from Chinese Foreign Minister Wang Yi who recently said China is willing to buy more US products after the US waived some tariffs.  

The week ahead

Looking ahead, the focus will revert to global manufacturing and the US jobs market following the unexpectedly soft August non-farm payrolls report. A moderate rebound in the pace of hiring alongside a slight uptick in the year-on-year rate of growth of average hourly earnings is expected.  

“We expect payrolls to increase by 150k in September, following the below-consensus 130k August print. Jobs in the goods sector should remain soft, while we look for a modest rebound in services. The household survey should show the unemployment rate remaining steady at 3.7%, while wages are expected to rise 0.2% m/m, leaving the annual rate unchanged at 3.2% y/y,”

analysts at TD Securities explained.  

DJIA levels

The index was testing below the  21-day moving average and came into close proximity of the 50-DMA.  A  drop to a 50% mean reversion of the August to recent swing highs at 26379 guards territory down to the low 26000s that meets a 61.8% retracement.   Bulls had been testing the trend-line resistance at the highs of the day here at 27016 which are guarding a correction back to the September highs in the 27300s.