Stocks decline on trade fears
Dow falls 287.26 points as U.S.-China trade rift threatens to come to a boil.
Big industrial and tech firms’ stocks skidded Tuesday as the trade dispute between the United States and China threatened to come to a boil. Smaller companies less focused on overseas trade fared better, as did stocks that pay dividends.
The Dow Jones industrial average slid 287.26 points, or 1.1%, to 24,700.21. Tuesday was the index’s sixth drop in a row. The Standard & Poor’s 500 index fell 11.18 points, or 0.4%, to 2,762.57. The Nasdaq composite fell 21.44 points, or 0.3%, to 7,725.59. International markets suffered steeper losses.
Oil and copper fell. Both are commodities that would be susceptible if a trade dispute caused a slowdown in global economic growth. Cautious investors moved money into bonds.
Smaller and more domestically focused firms notched small gains. The Russell 2000 index edged up 0.99 of a point, or 0.1%, to a record 1,693.45. That index is up 10.3% this year; the S&P 500 has risen 3.3%, and the Dow is down slightly.
Industrial and tech firms took some of the biggest losses as investors worried that the U.S.-China trade dispute could grow more intense and drag down global economic growth. The dollar also got stronger, and the ICE-U.S. Dollar Index hit its highest level since July. That makes U.S. goods more expensive in other markets.
Aerospace company Boeing dropped 3.8% to $341.12, and construction and mining equipment maker Caterpillar slid 3.6% to $143.30. Apple fell 1.6% to $185.69. Companies that make cars, steel and aluminum and chemicals also took heavy losses.
So did shares of Chinese companies listed in the United States. E-commerce company Alibaba slid 2% to $204.43. Search engine firm Baidu fell 2.5% to $262.11.
The euro sank to $1.1575 from $1.1615. The dollar fell to 110.07 yen from 110.44 yen.
Bond prices climbed as investors turned more cautious. The yield on the 10year Treasury note fell to 2.89% from 2.92%. The yield on the 10-year note is just 0.35 of a percentage point higher than the yield on the two-year, the smallest gap since summer 2007. For economists, the gap starts flashing a warning signal when short-term Treasurys are yielding more than their long-term counterparts. That’s a scenario called an inverted yield curve, and it has preceded each of the last seven recessions.
Shares of Chinese telecom giant ZTE dived 24.8% in Hong Kong after the U.S. Senate sought to restore a ban that prevents the company from buying U.S. components for seven years. The Senate’s move would block a White House plan to stop the ban in exchange for a big fine and other penalties. U.S. companies that supply ZTE also sank. Acacia Communications fell 3.7% to $33.94.
Healthcare companies rose. CVS Health jumped 4.5% to $70.77 after the drugstore chain and pharmacy benefits manager said it will start making home deliveries of prescription drugs and other items.
As the dollar gained strength and investors worried about economic growth, oil prices turned lower. U.S. crude fell 1.2% to $65.07 a barrel. Brent crude, the international standard, fell 0.3% to $75.08 a barrel.
Wholesale gasoline shed 0.8% to $2.04 a gallon. Heating oil fell 0.5% to $2.12 a gallon. Natural gas fell 1.7% to $2.90 per 1,000 cubic feet.
Gold fell 0.1% to $1,278.60 an ounce. Silver fell 0.7% to $16.32 an ounce. Copper sank 1.9% to $3.05 a pound.