Banks, industrials fall as trade tensions hit stocks again
NEW YORK » U.S. stocks sank again Wednesday as investors worried about tariffs and rising trade tensions. That hurt industrial companies, while banks slumped along with interest rates.
Stocks rose in the morning as investors looked for a rebound from the previous day’s losses, but with European leaders warning about the risks of trade disputes, indexes gradually headed lower. Boeing and other industrial companies, including airlines and defense companies, took some of the worst losses.
Stocks have bounced around since President Donald Trump announced his tariff plans at the start of this month. They slumped at first, but came back after the administration said it would grant exemptions to some countries. They’ve slipped over the last two days as investors considered the possibility of greater trade tensions with Europe and China.
“Since the correction, investors have been a little bit more sensitive to risk,” said Karyn Cavanaugh, senior market strategist at Voya Investment Strategies. “Before the correction, investors were almost bulletproof.”
Elsewhere, banks fell along with bond yields. Declining yields force interest rates on loans like mortgages lower, which hurts bank’s profits. Household goods companies also fell while department stores and other retailers lost ground after the Commerce Department said retail sales declined in February.
The S&P 500 index lost 15.83 points, or 0.6 percent, to 2,749.48. The Dow Jones industrial average lost 248.91 points, or 1 percent, to 24,758.12. The Dow is comprised of 30 large multinational companies, some of which will feel a pinch from higher metals costs or from retaliatory tariffs that may be placed on U.S.made goods.
The Nasdaq composite fell 14.20 points, or 0.2 percent, to 7,496.81. The Russell 2000 index of smaller-company stocks declined 7.74 points, or 0.5 percent, to 1,584.31.
European Union head Donald Tusk urged Trump to pursue more cooperation with Europe instead of putting tariffs on European goods. The EU wants an exemption from the tariffs on aluminum and steel imports that Trump recently announced and has said it could retaliate with tariffs of its own.
German Chancellor Angela Merkel said she can’t predict if those talks will succeed.
Aerospace and defense giant Boeing slid $8.41, or 2.5 percent, to $330.26. Arconic, which uses a lot of aluminum in making products for aerospace companies, lost 89 cents, or 3.6 percent, to $24.06. Defense contractors including Raytheon also declined, as did airlines.
Cavanaugh said a trade war is unlikely because the Trump administration is unlikely to take steps that seriously harm global trade. While investors have sold industrial stocks, she said it’s possible some of them will benefit from changes to NAFTA or other trade agreements.
“You have to be careful when you’re trying to Washington-proof your portfolio because you don’t know what’s going to happen,” she said.
Bond prices climbed, sending yields lower. The yield on the 10-year Treasury note fell to 2.82 percent from 2.84 percent, a significant move. Citigroup fell $1.44, or 1.9 percent, to $73.47 and Bank of New York Mellon lost $1.09, or 1.9 percent, to $54.87.
Retail sales dipped 0.1 percent last month as car sales declined, and so did purchases at gas stations and department stores. Kohl’s slid $1.86, or 2.9 percent, to $62.25 and discount retailer Dollar Tree lost $1.61, or 1.7 percent, to $92.81.
The Commerce Department said shoppers spent more money online and at catalog retailers, and Amazon edged higher. Spending at restaurants, clothiers and building materials stores also increased.
Signet Jewelers plunged after the jewelry retailer gave profit and sales forecasts that were weaker than analysts expected. Signet also said it intends to cut at least $200 million in spending and will sell its non-prime credit receivables. It will take a loss of about $170 million on that sale. The stock dropped $9.69, or 20.2 percent, to $38.22.
Tesla declined after Bloomberg News reported that a second senior finance executive resigned. Bloomberg said Treasurer Susan Repo left to become chief financial officer at another company. A week ago the electric car maker said Chief Accounting Officer Eric Branderiz left “for personal reasons.” Separately, CNBC reported that Tesla is having problems manufacturing some parts for its highly anticipated Model 3 sedan.
Tesla slipped $15.21, or 4.4 percent, to $326.63.