Dow Falls Sharply As Trumponomics Fails To Deliver (#GotBitcoin?)
Stocks slide broadly; Trump accuses China of engaging in currency manipulation. Dow Falls Sharply As Trumponomics Fails To Deliver (#GotBitcoin?)
Stocks were pummeled by selling Monday, pushing indexes from New York to Shanghai lower, as the yuan reeled and fresh trade threats between Beijing and Washington raised fears of an economic slowdown.
The Dow Jones Industrial Average fell 856 points, or 3.2%, to 25628. The S&P 500 shed 3.3% and the Nasdaq Composite declined 3.8%.
Stocks elsewhere retreated, with benchmark indexes in Europe, Japan and Hong Kong falling at least 1% apiece.
The latest wave of selling started, investors and analysts said, after reports showed Chinese and U.S. officials ratcheting up pressure on each other in their prolonged trade fight. The Chinese yuan sank below 7 per dollar and hit an all-time low in offshore trading Monday, with local officials blaming the depreciation on President Trump’s decision last week to extend tariffs to almost all Chinese imports. Mr. Trump responded on Twitter, accusing China of engaging in currency manipulation.
The back-and-forth dealt a blow to some investors’ hopes that the two countries would ultimately reach a trade agreement. Worries about the conflict have weighed on global growth this year. The trade fight has also had an impact on the U.S., where growth and consumer spending remain strong: The Federal Reserve last week cut interest rates for the first time since 2008, in part to cushion the economy against what it sees as rising financial risks.
“Global stocks had been priced for perfection,” said Kenny Polcari, managing principal at Butcher Joseph Asset Management. “Now people are realizing we may not get a deal.”
To be sure, even with Monday’s pullback, stocks remain close to all-time highs. The S&P 500 is up 13%, about 6% off its July 26 record and outperforming the Stoxx Europe 600, Nikkei Stock Average, Shanghai Composite and Hong Kong’s Hang Seng Index for the year.
But fears about the trade fight intensifying have nevertheless cast uncertainty on the market’s trajectory.
Monday’s selling also appeared to heighten traders’ bets on the Fed lowering interest rates multiple times by the end of the year.
Federal-funds futures, used by traders to place bets on the course of monetary policy, showed a 40% chance of at least three more quarter-point rate cuts in 2019, according to CME Group. That’s up from 8.2% one month ago.
“I think it’s fair to say that if the markets soften further, the Fed might react to that,” said Craig Birk, chief investment officer at Personal Capital.
At the same time, Mr. Birk cautioned against trying to make short-term bets based on the U.S.-China trade fight.
In past months, U.S. officials had suggested the two countries were close to a deal.
Now, “it seems like things are actually regressing,” Mr. Birk said.
Government bond yields around the world extended their recent retreat, a sign of growing pessimism about the economic outlook.
The German 10-year bund yield briefly hit a fresh low, while the yield on the benchmark 10-year U.S. Treasury note was at 1.743%, compared with 1.864% Friday. Bond yields fall as prices rise.
That sent bank stocks sharply lower, with the KBW Nasdaq Bank Index losing 4%. Lower bond yields tend to hurt shares of banks, since they dent their lending profitability.
Shares of industrial and technology firms also reeled. Many such companies rely heavily on global trade, meaning their shares often react quickly to news of U.S.-China relations.
Caterpillar fell 3.2%, while Facebook , Amazon.com , Apple and Google parent Alphabet fell more than 3% apiece.
Earlier, the Hang Seng Index fell nearly 3%, as a citywide strike disrupted the airport and subway services. It followed a ninth weekend of protests against a controversial extradition bill and China’s growing influence on the city.
In a speech Monday, Hong Kong’s leader Carrie Lam said society has become dangerous and unstable. The city’s stock market has fallen 9% in the past few weeks as the protests dent business sentiment and weigh on economic growth.
The Stoxx Europe 600 fell 2.3% to its lowest level since May, while Japan’s Nikkei Stock Average ended down 1.7%. Dow Falls Sharply As, Dow Falls Sharply As