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Stock Indexes Slide On Trump Tariff Threat, As China Marks holiday

Stock indexes chalked up losses midday Friday, as volume headed toward a fourth decline in a row. Procter & Gamble (PG) was the only stock in the 30-component Dow to rise, and its gain was meager.

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The Dow Jones industrial average slid 1.4%, while the S&P 500 and the Nasdaq lost 1% and 0.8% respectively. Small caps kept to the trend, as the Russell 2000 fell 1.1%.

Volume in the stock market today dropped on both major exchanges.

Lower volume has been the trend recently. Neither the bulls nor the bears are finding conviction.

Among IBD’s 197 industry groups, defensive plays were doing well Friday. The day’s biggest winners included discount chains, dairy and meat stocks. Steel logged the biggest loss.

Two factors were hurting stocks. On Thursday night, President Trump expanded his list of Chinese products targeted for tariffs. China did not immediately respond.

Friday was Qing Ming Jie day in China, a holiday when ancestors are honored and kites are flown. The Shanghai exchange was closed in observance of the holiday.

The second negative was the employment situation report for March. The U.S. economy added only 103,000 jobs vs. the consensus estimate of 175,000. But the previous month’s reading was revised upward from 313,000 to 326,000.

Breakouts Dwindle

Breakouts were scarce Friday, dwindling from Thursday’s moderate showing.

Gentex (GNTX), a maker of automotive electronics, tried to inch above a 24.17 buy point. Volume was soft. Gentex has a Composite Rating of 90, ranking it in the top 10% among all stocks in IBD’s database.

Ambac Financial (AMBC) cleared a 16.41 entry in a double-bottom pattern. Volume was routine. Ambac has middle of the pack ratings.

Some quality stocks are testing their 50-day or 10-week moving average lines. This could offer buying opportunities if the stock market shifts to an uptrend. The stocks included Netflix (NFLX), Apple (AAPL), ServiceNow (NOW), Micron Technology (MU) and Grubhub (GRUB).

The Problem For Stock Indexes

The catch, though, is the unlikeliness of a shift to an uptrend. Although the stock market can always surprise, things do not look encouraging.

As long as the Trump administration continues to flirt with a trade war, the stock market will have trouble pricing in the uncertain situation. And uncertainty is the worst possible situation for the market.

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