Published: Wed, August 07, 2019
Finance | By Kristine Clayton

Wall Street Suffers Big Losses Amid US - China Trade Dispute

Wall Street Suffers Big Losses Amid US - China Trade Dispute

- US stocks plunged to their worst loss of the year Monday and investors around the world scrambled to sell on worries about how much President Donald Trump's worsening trade war will damage the global economy.

The market last week was battered by the Federal Reserve's decision to cut interest rates by only one-quarter of a percentage point, Fed chair Jerome Powell's announcement that the July cut was not the beginning of a major rate-cutting cycle, and the announcement Thursday by President Donald Trump that tariffs would be extended to $300 billion of Chinese imports.

The Dow Jones Industrial Average lost 767.27, or 2.9%, to 25,717.74, and the Nasdaq composite fell 278.03, or 3.5%, to 7,726.04. The S&P 500 also dove nearly three percent to 2,844.74, while the Nasdaq Composite was down 3.5 percent - the worst percentage drop for all three market indexes in 2019.

The S&P 500 is now more than 6-percent below its record hit only last month.

Trump later accused China of manipulating its forex, asserting in a tweet: "That is a foremost violation which can tremendously weaken China over time".

The latest round of tariffs threatened by Trump would much more directly hit US consumers buying clothes and electronics made in China. The yield on the 10-year Treasury fell to 1.725 percent, down from 1.864 percent on Friday. Bank of America fell 4.8%, Citigroup lost 3.2% and Wells JPMorgan Chase dropped 2.9%.

The Dow Jones Industrial Average plunged by more than 950 points in afternoon trading as China delivered a one-two punch to the USA - first by allowing its currency to sink to an 11-year low against the U.S. dollar, and then by halting imports of United States crops.

Along with the forex switch, China retaliated by suspending the purchases of us agricultural products and threatened to slap tariffs on the farm goods bought after August 3, primarily based mostly on state media and other reports.

At the time of writing, Dow Jones has dropped 785 points.

Energy stocks were the biggest losers through the morning.

All 11 primary S&P 500 sectors dropped, with technology and communication services sectors leading the decliners.

After all, the US economic system remains to be rising, the unemployment charge stays near its healthiest stage in practically half a century and USA inventory indexes set report highs simply over per week in the past.

Monday's plunge in bond yields dragged on banks by making lending less profitable.

Apple gave up 5.2%. It not exclusively relies upon on Chinese language factories to assemble its iPhones, however China can be the one nation apart from america that accounts for greater than 10% of its gross sales.

Companies are in the final stretch of the latest round of quarterly earnings reports, and results haven't been as bad as initially feared, though still down from year-ago levels.

Apple (AAPL), which is expected to take a big hit from this latest tariff, saw one of the sharpest declines of the day, with a 5.23% drop. Revenue for firms within the S&P 500 is now anticipated to contract by roughly 1%. The yield on the 10-year Treasury fell to 1.76%. "They will tumble far more", said Rabobank in a report.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., August 6, 2019.

"A 3% drop in a day is very significant, and you're seeing sizeable moves in every major foreign market", said Rich Weiss, chief investment officer of multi-asset strategies at American Century Investments.

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