قالب وردپرس درنا توس
Home / Business / Dow sinks 800 points as trade truce enthusiasm fades

Dow sinks 800 points as trade truce enthusiasm fades



The Dow drops 805 points, or 3%, on Tuesday. It was down about 700 points.

The S & P 500 declined 2.5%, while the Nasdaq tumbled 3%.

Big tech stocks fell sharply. Apple (AAPL), Amazon (AMZN) and Alphabet (GOOGL) lost more than 3% apiece.
But investors are quickly realizing that the US-China trade was is not over. The tariffs already put in place remain.

"People were still very concerned about the trade," said Dan Suzuki, portfolio strategist at Richard Bernstein Advisors.

President Donald Trump did not help Wall Street's trade was worries on Tuesday. Trump said that he would "happily" sign a fair deal with China.

 What the US-China means for business

"President Xi and I want to deal with this, and it probably wants to, "Trump tweeted. "But if not remember … I am a Tariff Man."

Those words are not likely to become better. Steel and aluminum tariffs have lifted raw material costs and caused disarray in supply chains. And uncertainty about trade policy makes it very difficult for companies to make investment decisions.

Investors have grown very worried in recent days about fluctuation in the bond market. The gap between short and long-term Treasury rates has narrowed significantly this week. Before almost every recession, the yield curve has inverted, meaning short-term rates are higher than long-term ones.

The gap between the 10-year and two-year Treasury yields dropped on Tuesday to the minute since just before the Great Recession.

The tightening yield curve reflects fears about a growth slowdown and concerns about the Federal Reserve. Fed Chief Jerome Powell said he was a slow-track hike. Powell really was telegraphing a sudden change.
Barry Bannister, head of institutional equity strategy at Stifel, predicts the Fed wants to break its rate hikes because it has already made monetary policy too tight. He pointed to the slowdown in the housing market caused by higher mortgage rates.

"Bannister told reporters on Tuesday. It's too tight and risky to inversion because you do not know what the outcome will be." "Even if the Fed pauses, they may have done too much."

A flattening yield curve and slowing economic growth hurt the profitability of banks.

The financial sector was the second-worst performer in the S & P 500 on Tuesday. Bank of America (BAC), Morgan Stanley (MS) Citigroup (C) and Wells Fargo (WFC) declined more than 4% apiece.

But Suzuki cautioned that the markets could be overreacting. He pointed to strong corporate profits and the fact that the yield curve has not yet inverted.

"We do not see signs of an impending recession," Suzuki said. "There is a gap between market fear of a deterioration in the fundamentals and the actual fundamentals themselves."


Source link