Stocks skid as industrials, tech trade lower
Associated Press
NEW YORK — Car makers and technology and industrial companies fell Thursday as investors focused on the U.S.-China trade dispute, which could reduce company spending and earnings. The Dow Jones Industrial Average slipped for the eighth day in a row.
While investors generally don’t expect a trade war between the U.S. and China, they remain sensitive to signs that rising tariffs and trade tensions will hurt the global economy and reduce corporate profits. This week they’ve received some signs that this is happening. On Thursday German automaker Daimler said the tariffs China plans to put on cars imported from the U.S. will contribute to a small decline in earnings this year.
The previous day, Fed Chairman Jerome Powell said the U.S. central bank has heard about businesses holding off on hiring and spending in response to the trade conflicts.
Kate Moore, global equity strategist for BlackRock, said that investors have been hoping that the Republican-backed corporate tax cut would encourage companies to hire more workers, boost pay, and expand their operations, but the uncertainty over tariffs is discouraging them from doing that.
“There’s a fear that rising uncertainty around trade and tariffs is going to significantly affect investment decisions and hiring decisions, and potentially take some steam off of what has looked like a very strong expansion,” she said. She added that companies have been reluctant to make major investments since the financial crisis of 2008-09, and some investors felt the tax cuts would help change that.
Online retailers skidded and rivals such as department stores rose after the Supreme Court ruled that states can force more online shoppers to pay sales tax. Energy companies declined ahead of a meeting where OPEC countries and other nations are expected to increase oil production. Bond yields fell, and big dividend payers like real estate investment trusts and utilities made some of the biggest gains on Wall Street.
The S&P 500 index slid 17.56 points, or 0.6 percent, to 2,749.76. The Dow fell 196.10 points, or 0.8 percent, to 24,461.70. The index has fallen 3.4 percent over the last eight days. Its last losing streak this long was in March 2017. The Nasdaq composite lost 68.56 points, or 0.9 percent, to 7,712.95. The Russell 2000 index of smaller-company stocks declined 18.04 points, or 1.1 percent, to 1,688.95. The Nasdaq and Russell 2000 both closed at record highs Wednesday.
U.S. crude dropped 0.3 percent to $65.54 a barrel in New York and Brent crude, the international standard for oil prices, lost 2.3 percent to $73.05 a barrel in London.
Bond prices climbed. The yield on the 10-year Treasury note fell to 2.90 percent from 2.94 percent. That helped stocks that pay big dividends such as utilities.