While off the worst levels of the day, U.S. equities finished lower, marking the largest weekly decline of 2019 and following yesterday’s sharp drop, courtesy of escalated trade worries after the U.S. threatened a new round of tariffs on the remaining list of Chinese goods. Investors also sifted through the July nonfarm payroll report, with job growth roughly matching forecasts and wages continuing to tick higher, but the average workweek surprisingly declined. Treasury yields were lower and the U.S. dollar extended yesterday’s slide, while crude oil prices were higher, trimming some of yesterday’s tumble and gold finished lower in choppy trading. On the earnings front, Dow members Exxon Mobil and Chevron were lower after their quarterly results, and NetApp disappointed with its guidance.

The Dow Jones Industrial Average (DJIA) declined 98 points (0.4%) to 26,485, the S&P 500 Index decreased 22 points (0.7%) to 2,932 and the Nasdaq Composite fell 107 points (1.3%) to 8,004. In moderate volume, 881 million shares were traded on the NYSE and 2.2 billion shares changed hands on the Nasdaq. WTI crude oil moved $1.71 higher to $56.20 per barrel and wholesale gasoline was up $0.03 at $1.78 per gallon. Elsewhere, the Bloomberg gold spot price lost $4.15 to $1,441.03 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—shed 0.3% to 98.08. Markets were solidly lower for the week, as the DJIA decreased 2.7%, the S&P 500 Index fell 3.1% and the Nasdaq Composite tumbled 4.1%.

July job growth roughly in line with forecasts, trade deficit narrows slightly….

Nonfarm payrolls grew by 164,000 jobs month-over-month (m/m) in July, compared to the Bloomberg forecast of a 165,000 increase. The rise of 224,000 seen in June was revised to a gain of 193,000 jobs. Excluding government hiring and firing, private sector payrolls increased by 148,000, versus the forecasted gain of 165,000, after rising by 179,000 in June, revised from the 191,000 increase that was initially reported. Notable job gains occurred in professional and technical services, health care, social assistance, and financial activities, while retail payrolls weakened for a six-month, per Bloomberg, construction employment was subdued and mining and logging jobs dipped.

The unemployment rate remained at June’s 3.7% rate—holding near a 50-year low—versus forecasts to dip to 3.6%, with the labor force participation rate—the percentage of working-age people in the labor force—moving higher. Average hourly earnings were up 0.3% m/m, versus projections of a 0.2% increase, and matching June’s upwardly-revised gain. Y/Y, wage gains were 3.2% higher, versus estimates to match June’s unadjusted 3.1% gain. Finally, average weekly hours dipped to 34.3, compared to estimates to match June’s 34.4 rate.

The trade balance showed that the deficit narrowed by a smaller rate than anticipated to $55.2 billion in June, compared to estimates of $54.6 billion. May’s deficit was revised lower to $55.3 billion. Exports fell 2.1% m/m to $206.3 billion, while imports dropped 1.7% to $261.5 billion.

The final July University of Michigan Consumer Sentiment Index was unadjusted at the preliminary figure of 98.4, compared to estimates of 98.5. The index was slightly above June’s 98.2 level. The 1-year inflation forecast dipped to 2.6% from June’s 2.7% rate, and the 5-10 year inflation outlook rose to 2.5% from 2.3%.

Factory orders rose 0.6% m/m in June, versus expectations of a 0.7% increase, and compared to May’s downwardly-revised 1.3% drop. Stripping out the volatile transportation component, orders ticked 0.1% higher, versus May’s negatively-adjusted flat reading. Final durable goods orders preliminarily reported last week, were revised lower to a 1.9% m/m rise for June, and orders for non-defense capital goods excluding aircraft, considered a proxy for business spending, were revised down to a 1.5% increase.

Treasuries finished higher after yesterday’s rally that came in the wake of Wednesday’s rate cut by the Fed and after President Trump announced yesterday that he would impose a 10% tariff on $300 billion in Chinese goods not already subject to U.S duties effective September 1, escalating worries surrounding trade, and even though the U.S. and China are slated to meet again to resume talks in September. The yield on the 2-year note ticked 1 basis point lower to 1.71%, the yield on the 10-year note fell 4 bps to 1.85%, and the 30-year bond rate decreased 6 bps to 2.38%.

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