Dow Jones Today: We’ve Seen This Movie Before

Friday was another rough day for stocks. Guess why? President Donald Trump made some comments about the status of the trade relationship with China. The U.S. and China are set to hold trade talks in September, and though things have been contentious between the world’s two largest economies, those talks remain on the schedule.

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However, President Trump gave market participants more than they wanted to ponder on a summer Friday, noting that he seems to be OK with the talks happening or not.

“We’ll see whether or not we keep our meeting in September,” said Trump at the White House today. “If we do, that’s fine. If we don’t, that’s fine.”

Remember that on Sept. 1, assuming no trade resolution is agreed to before that date, the U.S. will impose a 10% tariff on another $300 billion worth of Chinese goods. That would go on top of the 25% tariff on $250 billion worth of Chinese products already in place.

On the back of those comments, the Nasdaq Composite lost 1% while the S&P 500 gave back about two-thirds of a percent. The Dow Jones Industrial Average headed into the weekend with a Friday loss of 0.34%.

As for today’s Dow losers, it was a list of the usual suspects thanks to the president’s trade comments. Caterpillar (NYSE:CAT), Nike (NYSE:NKE) and all of the Dow’s technology components closed lower on the day.

Bad Big Blue

On a light news day specific to the stock, IBM (NYSE:IBM) tumbled by 2.84%, extending its weekly slide to over 8%. IBM’s Friday woes were likely attributable to the China comments offered by the president. This recent pullback in the stock could give investors reasons to consider the name, particularly as IBM integrates Red Hat into the fold, which is widely viewed as a positive catalyst for the shares.

Predictable Victim

Shares of Intel (NASDAQ:INTC) slid 2.52% today, meaning the stock is about 23% below its 52-week high. That’s a bear market and then some. Semiconductor stocks have been at the epicenter of the trade spat with China because the U.S. is taking a hard line against U.S. technology companies working with controversial Chinese telecom firm Huawei Technologies.

A slew of domestic chip makers have pressured the White House to allow them to do some business with Huawei, but these relationships are in a tenuous spot right now, so much that the Chinese company is taking steps to reduce its dependence on American technology.

Surprising Refuge on the Dow

Microsoft (NASDAQ:MSFT) traded lower today, but shares of the largest U.S. company by market value have been steady over the past week and there are inklings the stock is becoming something of a safe-haven for adventurous, though tariff-weary investors.

Software companies like Microsoft are not 100% tariff-immune, but “they may hold up better than some consumer technology names that manufacture products in China, according to Rishi Jaluria, senior research analyst at D.A. Davidson,” according to CNBC.

Bottom Line on the Dow Today

McDonald’s (NYSE:MCD) was easily the best-performing name in the Dow today, gaining 1.43% on its way to a third consecutive record high. Shares of the burger giant have more than doubled in four years and with stock up about 25% this year, it’s safe to say this is another fine avenue for skirting tariff controversy.

McDonald’s was one of the Dow stocks that closed higher today, but with President Trump again being aggressive on trade, broader benchmarks were surprisingly resilient to close the week.

For now, Trump is backing off matching the Chinese with a currency devaluation that gets us back to a familiar place: relying on a Federal Reserve rate cuts to weaken the greenback. The Fed may have no choice to again oblige the president if the trade war heats up or doesn’t cool off.

Todd Shriber doesn’t own any of the aforementioned securities.

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