Stocks claw back from early plunge

The Reporter (Lansdale, PA) - - BUSINESS - By Alex Veiga

U.S. stocks clawed most of their way back from a deep slide Thurs­day that at one point had wiped out the mar­ket’s gains for the year.

An early plunge briefly knocked more than 700 points off the Dow Jones In­dus­trial Av­er­age as the ar­rest of a se­nior Chi­nese tech­nol­ogy ex­ec­u­tive threat­ened to cause an­other flare-up in ten­sions be­tween Wash­ing­ton and Bei­jing.

The sell-off eased by late af­ter­noon, how­ever, af­ter The Wall Street Jour­nal re­ported that the Fed­eral Re­serve is con­sid­er­ing break­ing with its cur­rent ap­proach of steady in­ter­est rate hikes, fa­vor­ing a wait-and-see ap­proach. That was re­lief to in­vestors wor­ried that the Fed might raise in­ter­est rates too fast, which could choke off eco­nomic growth.

“The Fed is try­ing to, in essence, come out and make it clear they are not on a rigid sched­ule of rate hikes next year,” said Quincy Krosby, chief mar­ket strate­gist at Pru­den­tial Fi­nan­cial.

The S&P 500 in­dex fell 4.11 points, or 0.2 per­cent, to 2,695.95. The bench­mark in­dex had been down as much as 2.9 per­cent.

The Dow dropped 79.40 points, or 0.3 per­cent, to 24,947.67. The av­er­age briefly slumped as much as 784 points.

The tech­nol­ogy-heavy Nas­daq com­pos­ite re­versed an early loss to fin­ish with a gain, adding 29.83 points, or 0.4 per­cent, to 7,188.26.

The Rus­sell 2000 in­dex of small-com­pany stocks gave up 3.34 points, or 0.2 per­cent, to 1,477.41.

Traders con­tin­ued to shovel money into bonds, a sig­nal that

they see weak­ness in the econ­omy ahead. The yield on the 10-year Trea­sury note fell to 2.89 per­cent from 2.92 per­cent on Tues­day, a large move.

U.S. stock and bond trad­ing were closed Wed­nes­day be­cause of a na­tional day of mourn­ing for Pres­i­dent Ge­orge H.W. Bush.

Losses in banks and en­ergy and in­dus­trial stocks out­weighed gains in in­ter­net and real es­tate com­pa­nies.

Cit­i­group fell 3.5 per­cent to $60.06. Hal­libur­ton slid 4.7 per­cent to $29.79. Dis­cov­ery climbed 4.7 per­cent to $26.99.

Last week, stocks jumped af­ter Fed Chair­man Jerome Pow­ell in­di­cated the cen­tral bank might con­sider a pause in rate hikes next year while it gauges the im­pact of its credit tight­en­ing pro­gram.

The Fed has raised rates three times this year and is ex­pected to boost rates for a fourth time at its Dec. 1819 meet­ing of pol­i­cy­mak­ers. That steady pace of rate hikes has be­gun to worry some in­vestors amid grow­ing signs that some sec­tors of the econ­omy are hurt­ing, in­clud­ing the U.S. hous­ing mar­ket. At the same time, there has been grow­ing ev­i­dence that global eco­nomic growth is slow­ing.

“The mar­ket seems right now to be fo­cused on in­creased risks for a 2020 re­ces­sion,” said Patrick Schaf­fer, Global In­vest­ment Spe­cial­ist, J.P. Mor­gan Pri­vate Bank. “It’s a very hard mar­ket to buy when you see re­ally strong sig­nals that we are in­deed late (in the eco­nomic) cy­cle.”

Thurs­day’s ini­tial wave of sell­ing in the mar­ket came about as traders re­acted to the news that Cana­dian au­thor­i­ties ar­rested the chief fi­nan­cial of­fi­cer of China’s Huawei Tech­nolo­gies on Wed­nes­day for pos­si­ble ex­tra­di­tion to the U.S. The Globe and Mail news­pa­per, cit­ing law en­force­ment sources, said Meng is sus­pected of try­ing to evade U.S. trade curbs on Iran.

Meng is a prom­i­nent mem­ber of Chi­nese so­ci­ety as deputy chair­man of the board and the daugh­ter of com­pany founder Ren Zhengfei. China de­manded Meng’s im­me­di­ate re­lease.

The ar­rest came less than a week af­ter Pres­i­dent Don­ald Trump met with Chi­nese Pres­i­dent Xi Jin­ping at the G-20 sum­mit in Ar­gentina.

Mar­kets ral­lied on Mon­day on news that Trump and Xi agreed to a tem­po­rary, 90-day stand-down in their trade dis­pute. That op­ti­mism quickly faded as skep­ti­cism grew that Bei­jing will yield to U.S. de­mands any­time soon, lead­ing to a steep sell-off in global mar­kets on Tues­day.

On Thurs­day, China’s gov­ern­ment said it would promptly carry out the tar­iff cease-fire with Wash­ing­ton. It also ex­pressed con­fi­dence that the two na­tions can reach a trade agree­ment. The re­marks sug­gest Bei­jing wants to avoid dis­rup­tions from Meng’s ar­rest.


Trader Gre­gory Rowe works on the floor of the New York Stock Ex­change on Thurs­day.

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