U.S. Stocks End Rocky Month Lower as Tariffs Loom: Markets Wrap

(Bloomberg) -- U.S. equities saw their first monthly decline since May, as consumer sentiment slid and a tariff deadline in the Sino-American trade war loomed. Treasuries slipped after a key measure of inflation came in as expected, while the euro fell to a two-year low against the dollar.

The S&P 500 fluctuated throughout Friday’s session, finishing almost unchanged on the day, after rallying Thursday on a pause in trade threats between the U.S. and China. But new tariffs on more than $110 billion in Chinese imports are set to take effect Sunday, and President Donald Trump shows little sign of backing down. Meanwhile, a hurricane is heading toward Florida, threatening businesses like amusement park operators and cruise lines.

Data on the world’s largest economy showed personal spending accelerated in July, exceeding forecasts. Household consumption remained solid at the start of the third quarter, but the University of Michigan consumer sentiment index dropped to its lowest since October 2016. The Federal Reserve’s preferred measure of underlying inflation continues to fall short of its goal.

“The U.S. consumer is strong, but if they lose confidence and slow their spending that would be negative for the U.S. picture, which is currently the outlier -- remaining strong while the rest of the world is slowing,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

The Stoxx Europe 600 Index rose for a second day. Equity benchmarks in Tokyo and Seoul led gains across most of Asia, though shares in Hong Kong lagged the rally after news broke that prominent protest figures were arrested, and Shanghai’s index closed lower for the fourth time this week.

The pound slipped as lawmakers lost a bid to block Prime Minister Boris Johnson’s plan to suspend parliament. The euro dropped below $1.10 for the first time in since May 2017 as traders closed out hedges at month’s end and data showed inflation remained stubbornly low.

Bunds reversed early losses while Italian bonds declined as coalition talks faltered. Argentina’s bonds extended declines after S&P Global Ratings cut the country’s foreign- and local-currency credit ratings. West Texas crude fell the most in two weeks and gold fell.

Here are the main moves in markets:

Stocks

• The S&P 500 Index was little changed as of 4:01 p.m. New York time.
• The Stoxx Europe 600 Index climbed 0.7%.
• The U.K.’s FTSE 100 Index rose 0.3%.
• Germany’s DAX Index increased 0.8%.
• The MSCI Emerging Markets Index climbed 1.5%, a three-week high.

Currencies

• The Bloomberg Dollar Spot Index rose 0.1% to a two-year high.
• The euro decreased 0.6% to $1.0991.
• The British pound declined 0.1% to $1.2168.
• The Japanese yen increased 0.3% to 106.21 per dollar.

Bonds

• The yield on 10-year Treasuries gained less than one basis point to 1.50%.
• The yield on two-year Treasuries fell two basis points to 1.50%.
• Britain’s 10-year yield climbed four basis points to 0.479%.
• Germany’s 10-year yield declined one basis point to -0.70%.

Commodities

• West Texas Intermediate crude fell 3% to $55.04 a barrel.
• Gold fell 0.3% to $1,523.78 an ounce.

--With assistance from Adam Haigh, Laura Curtis, Elena Popina and Sarah Ponczek.

To contact the reporter on this story: Vildana Hajric in New York at vhajric1@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Andrew Dunn

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