Economy, trade outlook drag down Wall St

Wall Street has slipped, weighed down by financial stocks as a deepening of the Treasury yield curve inversion raised US recession worries and uncertainty over any progress in trade negotiations between the US and China took a toll.

US stocks initially advanced, building on Monday's bounce, as President Donald Trump forecast another round of talks with Beijing. China's foreign ministry, however, reiterated on Tuesday that it had not received any recent US telephone call on trade.

A deepening of the inversion in the yield curve between the two-year and 10-year US Treasuries underscored worries about a weakening global economy.

"It is going to be pretty confusing and unfortunately, without some kind of a major backpedalling on trade, to maybe slow things down and push things out, the economy is going to suffer," said Jack Ablin, chief investment officer at Cresset Capital Management in Chicago.

The Dow Jones Industrial Average on Tuesday fell 124.66 points, or 0.48 per cent, to 25,774.17; the S&P 500 lost 9.53 points, or 0.33 per cent, to 2,868.85; and the Nasdaq Composite dropped 26.79 points, or 0.34 per cent, to 7,826.95.

Financial shares, which tend to weaken in lower-rate and soft economic environments, lost 0.72 per cent, while the defensive utilities sector led advancing groups, edging up 0.14 per cent.

The S&P 500 has lost nearly 4 per cent in August on worries over the impact of the intensifying US-China trade war on the slowing global economy and corporate profits, along with uncertainty around the pace of US interest rate cuts from the Federal Reserve.

With the next Federal Reserve meeting scheduled for mid-September, investors are gauging the strength of the US economy for clues on where rates are headed. The release next week of the government's closely watched monthly jobs report and manufacturing data will give investors factors to consider before the policy announcement.

Among individual stocks, Johnson & Johnson shares rose 1.44 per cent after an Oklahoma judge said the drug-maker must pay $US572.1 million ($A847 million) for its part in fuelling the US opioid epidemic, a sum that was substantially less than what investors had expected.

Philip Morris International shares fell 7.76 per cent after the tobacco-maker said it was in talks with Altria Group to combine in an all-stock merger of equals. Altria's shares were down 3.95 per cent.

Shares of JM Smucker tumbled 8.18 per cent after the packaged food-maker cut its full-year earnings forecast and missed estimates for quarterly profit and sales.

Declining issues outnumbered advancing ones on the NYSE by a 1.71-to-1 ratio; on the Nasdaq, a 2.41-to-1 ratio favoured decliners.

The S&P 500 posted 29 new 52-week highs and 36 new lows; the Nasdaq Composite recorded 38 new highs and 210 new lows.

About 6.29 billion shares changed hands in US exchanges compared with the 7.57 billion daily average over the last 20 sessions.

Austrlaian Associated PressBack to Breaking News

  • Print this page
  • Copy Link