Dow, S&P lose early gains after jobs report; Apple's stock sinks on outlook

Stocks turned negative late Friday morning, erasing an early rally that saw the Dow surge nearly 200 points following a stronger-than expected jobs report.

The prospect of an easing of trade tensions between China and the U.S. were also a factor, while shares of Apple Inc. remained under pressure following third-quarter results.


The Dow Jones Industrial Average

DJIA, -1.06%

lost 38 points, or 0.1%, to 25,344, the S&P 500 index

SPX, -1.34%

fell 8.62 points, or 0.3%, to 2,731, while the Nasdaq Composite Index

NQZ8, -1.83%

lost 58.52 points, or 0.8% to 7373.

On Thursday, the Dow

DJIA, -1.06%

rose 264.98 points, or 1.1%, to 25,380.74, while the S&P 500

SPX, -1.34%

gained 28.63 points, or 1.1%, to 2,740.37. The Nasdaq Composite Index

COMP, -1.71%

added 128.16 points, or 1.8%, to 7,434.06.

Stocks have been on the uspwing this week but logged sharp losses in October, with the S&P 500 shedding 6.9% for its biggest monthly decline since September 2011. The Dow dropped 5.1% in its biggest monthly percentage fall since January 2016, and the Nasdaq was the worst-performing major benchmark, sliding 9.2% for its biggest fall since November 2008.

Market drivers

The U.S. and China are a long way from reaching a trade deal, a senior Trump administration official said Friday, according to CNBC. The comment followed a Bloomberg report saying Trump had asked U.S. officials to prepare a draft trade agreement with China.

Traders were reacting to the Labor Department’s Friday morning announcement that the U.S. economy added 250,000 new jobs in October, beating economists expectations of 202,000, according to a MarketWatch poll. The unemployment rate remained flat at 3.7%, while the report showed year-over-year wage gains rising to 3.1%, slightly above the consensus estimate of 3%.

On Thursday, President Donald Trump tweeted that he had a “long and very good conversation” with Chinese President Xi Jinping, and news outlets in China confirmed that discussions took place. The phone conversations come ahead of a late-November meeting that is anticipated to take place on the sidelines of a G-20 summit of world leaders, where the pair could iron out differences.

Opinion: On the economy and rate hikes, the Fed looks lost in the stars

Friday’s trade action also comes after Apple Inc. posted results that were better than expected but disappointed Wall Street on its outlook and said it would no longer disclose unit sales of its products for investors, as it has for more than a decade, sending shares of the iPhone maker lower Friday.

Stocks in focus

Shares of Apple

AAPL, -7.30%

 were down 6.5% Friday morning.

Arista Networks, Inc.

ANET, +5.74%

stock rose 3.9% following a Thursday-evening earnings release that showed the company surpassing analyst revenue and profit expectations.

Synchrony Financial

SYF, -10.20%

shares are down 8.4% Friday, following reports that Walmart Inc.

WMT, -0.15%

is suing the company for breach of contract.

Shares of Starbucks Corp.

SBUX, +8.59%

shares are up 10.3% after the firm posted same-store sales growth of 4%, above analyst expectations.

Kraft Heinz Co.

KHC, -9.43%

stock is down 7.8% Friday after missing Wall Street profit estimates in the third quarter.

Symantec Corp.

SYMC, +5.31%

shares are up 6.4%, after reporting smaller third-quarter losses than expected.

Shares of Newell Brands Inc.

NWL, +13.72%

are up 15.4% in early trade, after the consumer-goods company raised its full-year guidance for 2018.

VeriSign, Inc.

VRSN, +14.91%

stock rallied nearly 18% Friday morning, after the company was upgraded at J.P. Morgan to neutral from underweight.

Exxon Mobil Corp.

XOM, -0.40%

stock is up 1.2%, after the company reported an earnings beat Friday morning

What the experts say

Thomas Hainlin, global investment strategist with US Bank, argued that the market will remain volatile until concrete progress is made in U.S.-China trade relations. “If the two largest economies in the world can’t agree on trade policy, that’s not great for markets,” he told MarketWatch.

“This sort of public posturing, private negotiation has been a tactic” the president has consistently used in trade negotiations, Hainlin said, suggesting that the midmorning downturn in the markets could be attributed to investors re-evaluating whether to take media reports on the president’s plans at face value.

“This is a great jobs report,” Randy Frederick, vice president of trading and derivatives at Charles Shwab. “Job growth was strong, and wage growth that shows we’re making progress, but that runaway inflation isn’t a concern,” he said.

Economic data

The U.S. trade deficit rose 1.3% in September to a seven-month high as imports hit a record.

U.S. factory orders increased 0.7% in September, the Commerce Department reported Friday, faster than the 0.5% economists expected.

Other markets

Asian stock markets were up Friday, possibly reflecting renewed investor optimism that a U.S.-China trade pact can be reached. European stocks were also trading up on the day.

Oil prices and the dollar ticked down in trading Friday, while gold edged lower.

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