Wall Street on track to snap four-day rally; latest trade threat weighs
FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 6, 2018. REUTERS/Brendan McDermid
NEW YORK: U.S. stocks looked set on Wednesday to snap a four-day winning streak after Washington's threat to impose tariffs on an additional US$200 billion worth of Chinese goods fanned trade war fears, while a sharp drop in oil prices hit energy.China responded to U.S. President Donald Trump's threats by accusing the United States of bullying and warned that it would hit back.
Industrial names including Boeing, 3M and Caterpillar, which have been among the hardest hit throughout the recent trade dispute, were among the Dow's biggest drags on Wednesday.The materials index, down 1.7 percent, was another big negative influence among sectors, with Freeport-McMoRan down 3.7 percent as copper prices hit their lowest in about a year."The tone of today didn't start off well due to tariff fears," said Michael Antonelli, managing director, institutional sales trading, at Robert W. Baird in Milwaukee.But, he said, "the drop in oil is driving this extra drop lower."
The S&P 500 energy index fell 2.1 percent, leading sector declines. U.S. crude oil futures settled down 5 percent on the trade dispute escalation and as expectations of growing supplies increased on news that Libya would reopen ports.The Dow Jones Industrial Average fell 186.39 points, or 0.75 percent, to 24,733.27, the S&P 500 lost 16.59 points, or 0.59 percent, to 2,777.25 and the Nasdaq Composite dropped 32.84 points, or 0.42 percent, to 7,726.35.The drop is not as steep as what was seen in late March and early April when the escalating trade rhetoric between China and the United States led to the S&P falling more than 2 percent on four occasions.The market slide has been contained by the speculation that the Trump administration could change its mind by the end of August, when the tariffs are due to come into effect, some strategists said.
Investors are also looking forward to the earnings season, where S&P 500 companies are expected to post second-quarter profit growth of around 21 percent, according to Thomson Reuters data.However, Morgan Stanley told clients that the earnings season could trigger risk aversion among investors if companies start warning of slower growth due to trade tariffs.Chipmakers, which largely depend on China for their revenue, weighed the most, with the Philadelphia semiconductor index falling 2.4 percent.The utilities sector was the only one in positive territory, with a 0.8 percent gain.Twenty-First Century Fox fell 3.6 percent after the media company raised its offer for Britain's Sky, seeing off rival bidder Comcast for now. Comcast shares were up 1.2 percent.Declining issues outnumbered advancing ones on the NYSE by a 2.31-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored decliners.The S&P 500 posted 12 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 59 new highs and 43 new lows.(Additional reporting by Amy Caren Daniel in Bengaluru; Editing by Anil D'Silva and Chizu Nomiyama)
Source : http://www.channelnewsasia.com/news/business/wall-street-on-track-to-snap-four-day-rally--latest-trade-threat-weighs-10520834