Stocks – Dow Sinks as Trade Tensions Rattle Investors


Stocks - Dow Sinks as Trade Tensions Rattle Investors – The Dow reversed intraday gains to close sharply lower Monday on fears of a further escalation in U.S.-China trade tensions.

The Dow Jones Industrial Average fell about 0.99%. The S&P 500 fell 0.66%, while the Nasdaq Composite fell 1.63%.

The blue-chip index was down more than 500 points before a last-minute rise pared some losses, with the Dow ending down less than 300 points.

Bloomberg News reported that the U.S. is planning on implementing additional tariffs on more Chinese products if upcoming talks between President Donald Trump and Chinese President Xi Jinping are unsuccessful.

The U.S. has slapped tariffs on $250 billion worth of Chinese goods, about half the value of US imports from the country. China has retaliated with tariffs on $110 billion worth of American exports.

The report rattled risk sentiment, prompting investors to abandon their bullish intraday bets, with trade-sensitive names and technology leading the decline on Wall Street.

Shares of Boeing (NYSE:BA) fell 6% and Caterpillar (NYSE:CAT) nearly 1%, two bellwethers for global trade. Boeing was also pressured by news that a Boeing 737 airliner crashed into the sea with 189 people on board in Indonesia.

A plunge in tech stocks, meanwhile, also exacerbated the selloff on Wall Street, led by Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT) and (NASDAQ:AMZN) and Apple (NASDAQ:AAPL).

The S&P 500 Information Technology index closed down about 2%.

Energy, meanwhile, retreated further into correction territory, as oil prices fell on concerns about waning global demand and a continued increase in output from Saudi Arabia and Russia ahead of sanctions on Iran, slated for Nov. 4.

Financials, however, offered a semblance of refuge, rising nearly 1% as banking stocks edged higher supported by an uptick in U.S. government bond yields.

JPMorgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS) rose 1%, while Wells Fargo (NYSE:WFC) rose nearly 2%.

The weaker start to the week on Wall Street comes despite calls from analysts claiming the broader averages were set for a rebound as the recent selloff was overdone.

“The recent sell-off has priced too sharp of a near-term growth slowdown,” David Kostin, Goldman’s chief U.S. equity strategist, said in a note to clients. “We expect continued economic and earnings growth will support a rebound in the S&P 500.”

In corporate news, IBM (NYSE:IBM) closed 4% lower after announcing Sunday it would acquire software maker Red Hat (NYSE:RHT) in a deal worth about $34 billion, or $190 a share, 63% above Red Hat’s closing price Friday, raising concerns about margin pressures. IBM said it would continue to grow its dividend, but will suspend its share repurchase program in 2020 and 2021.

IBM’s M&A activity, which by design is supposed to augment its IT Services segment with digital-related skills “will likely continue to have a detrimental impact on margins and free cash flows,” Wedbush said.

Top S&P 500 Gainers and Losers Today:

Red Hat (NYSE:RHT), Cerner (NASDAQ:CERN) and Macy’s(NYSE:M) were among the top S&P 500 gainers for the session.

L3 Technologies Inc (NYSE:LLL), Harris Corporation (NYSE:HRS) and Take-Two Interactive (NASDAQ:TTWO) were among the worst S&P 500 performers of the session.

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